Hotel and Restaurant Accounting

Syllabus

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Chapter 1: Accounting: A Management Resource

1. The Necessity for Accounting
2. Why Study Accounting?
3. What Is Business Accounting?
   a. Fundamental Purpose
   b. Bookkeeping
   c. Accounting
   d. The “Bean Counter” Myth
4. Uniform System of Accounts for the Lodging Industry
5. Why Financial Statements Are Necessary
   a. The Elements Necessary to Assemble Financial Statements
6. The Corporate Accounting Department
7. Business Transactions
8. The Accounting Equation
9. Financial Statements
   a. Consolidated Financial Statements
10. Accounting Income Versus Taxable Income
11. The Accounting Profession
12. The Certified Public Accountant
    a. Audit and Attest Function
13. Influence of Government and Professional Organizations
    a. Securities and Exchange Commission
    b. Internal Revenue Service
    c. American Institute of Certified Public Accountants
    d. Financial Accounting Standards Board
    e. Hospitality Financial & Technology Professionals
    f. American Hotel & Lodging Association
    g. American Hotel & Lodging Educational Institute
    h. National Restaurant Association
14. Generally Accepted Accounting Principles
    a. Unit of Measurement
    b. Historical Cost
    c. Going-Concern
    d. Conservatism
    e. Objectivity
    f. Time Period
    g. Realization
    h. Matching
    i. Materiality
    j. Consistency
    k. Full Disclosure
    l. Fair Value

Chapter 2: Business Formation: Important Decisions

1. Feasibility Study
2. Legal Business Structure
   a. Proprietorship
   b. Partnership
   c. Corporation
   d. Limited Liability Company

3. Taxation of Business Income
   a. Proprietorship
   b. Partnership

   c. Corporation
   d. Limited Liability Company

4. Buying a Franchise

Chapter 3: Survey of Financial Statements

1. Basic Financial Statements
2. Statement of Income
   a. Revenue
   b. Cost of Sales
   c. Gross Profit
   d. Operating Expenses
   e. Income Before Fixed Charges and Income Taxes
   f. Fixed Charges
   g. Income Before Income Taxes
   h. Income Taxes
   i. Net Income (or Loss)
3. Equity Statements
   a. Statement of Owner’s Equity
   b. Statement of Retained Earnings
4. Balance Sheet
   a. Current Assets
   b. Property and Equipment
   c. Other Assets
   d. Current Liabilities
   e. Long-Term Liabilities
   f. Equity Section
5. Statement of Cash Flows
   a. Operating Activities
   b. Investing Activities
   c. Financing Activities

Chapter 4: Exploring the Balance Sheet

1. Preparation of the Balance Sheet
2. Asset Classification
3. Current Asset Accounts
   a. Cash
   b. Short-Term Investments
   c. Accounts Receivable
   d. Inventories
   e. Prepaid Expenses
4. Non-current Asset Accounts
   a. Investments
   b. Property and Equipment
   c. Other Assets
5. Liability Classification
6. Current Liability Accounts
   a. Accounts Payable
   b. Sales Tax Payable
   c. Income Taxes Payable
   d. Accrued Payable
   e. Advance Deposits
   f. Current Maturities of Long-Term Debt
7. Long-Term Liability Accounts
   a. Reclassification Example
8. Bonds                                                                                           
   a. Types of Bonds
   b. Bond Prices
   c. Bonds Issued at a Discount
   d. Bonds Issued at a Premium
   e. Bond Sinking Fund
9. Equity Classification
10. Proprietorship Equity Accounts Capital
    a. Withdrawals
11. Partnership Equity Accounts
12. Corporation Equity Accounts
    a. Common Stock Issued
    b. Additional Paid-In Capital
    c. Retained Earnings
    d. Preferred Stock Issued
    e. Donated Capital
    f. Treasury Stock
    g. Stockholders’ Equity on the Balance Sheet
13. Limited Liability Company Equity Accounts

Chapter 5: Exploring the Income Statement

1. Preparation of the Income Statement
2. Revenue Classification
3. Sales Accounting
   a. Sales Taxes
   b. Servers’ Tips
4. Expense Classification
5. Cost of Sales Expense
   a. Food Cost
   b. Gross Profit
6. Inventory Systems
   a. Perpetual Inventory System
   b. Periodic Inventory System
   c. Inventories in Service Areas
7. Other Business Expenses
   a. Operating Expenses
   b. Fixed Expenses
   c. Income Taxes Expense
8. Depreciation

Chapter 6: The Bookkeeping Process

1. Origins of Bookkeeping
2. 21st Century Bookkeeping
   a. Double-Entry Accounting
3. Bookkeeping Accounts
   a. Account Balance
   b. Computer Processing of Accounts
   c. General Ledger
4. Learning Debits and Credits
   a. Methods of Learning Debits and Credits
5. Analyzing Business Transactions
6. Analyzing 21 Universal Transactions
7. The Nature of Debits and Credits
   a. Equality of Debits and Credit
   b. Computer Audit Trail
   c. Debit and Credit Rules
8. Recording 21 Universal Transactions
9. Contra Accounts
10. Normal Account Balance

Chapter 7: Computerized Accounting System: An introduction

1. Advantages of Computerized Systems
   a. Potential Disadvantages
2. Input Forms
   a. General Journal
   b. Special Journals
3. Output Forms
   a. Three-Column Account Format
   b. Subsidiary Ledgers
   c. Guest and City Ledgers
4. Online Accounting System
   a. Point-of-Sale Terminals
   b. Electronic Cash Registers
   c. Bar-codes
5. Features of Accounting Packages
6. Standard General Ledger Modules
   a. Chart of Accounts Module
   b. Starting Balances Module
   c. Comparative Data Module
   d. Journal and Posting Module
   e. Trial Balance Module
   f. Financial Statements Module
   g. General Ledger Printout Module
   h. Year-End Module
7. Selecting General Ledger Accounting Software

Chapter 8: Computerized Accounting Cycle: A Demonstration

1. Accounting Cycle
   a. Cash Basis Accounting
   b. Accrual Basis Accounting
   c. Manual vs. Computerized Accounting Cycle
2. Tower Restaurant: A Computerized Demonstration
   a. Tower’s Input Procedures
   b. Tower’s Computer Software
3. Conversion from Manual to Computer System
   a. Setting Up the Computer Chart of Accounts
   b. Computer Input of Account Balances
4. Journalizing the Monthly Business Transactions
5. Computerized Posting of the Special Journals
6. End-of-Month Accounting
   a. Working Trial Balance
   b. Adjusting Entries
   c. Computer Input of Adjusting Entries
7. Computation of Net Income or Loss
   a. Proprietorship Net Income
   b. Corporation Net Income
8. Computerized Financial Statements
9. Computerized General Ledger
10. Reversing Entries
11. Computerized Year-End Processing
    a. Automatic Closing Entries                                                         
    b. Post-Closing Trial Balance

Chapter 9: Restaurant Accounting and Financial Analysis

1. Restaurant Income Statement
2. Significance of Restaurant Accounting
3. Food Sales Accounting
   a. Coupons
   b. Service Charges
4. Beverage Sales Accounting
   a. Cashiering Single Price, Sales Tax Included
5. Cost of Sales
   a. Fast-Food Restaurants
   b. Employee Meals and Officers’ Checks
   c. Perpetual Inventory System
   d. Periodic Inventory System
6. Operating Expenses
   a. Salaries and Wages
   b. Employee Benefits
   c. Direct Operating Expenses
   d. Music and Entertainment
   e. Marketing Expenses
   f. Utility Services
   g. Repairs and Maintenance
   h. Occupancy Expenses
   i. Depreciation
   j. Administrative and General
   k. Other Income
7. Restaurant Balance Sheet
8. Chart of Accounts for Restaurants
9. Food and Beverage Ratio Analysis
   a. Food Cost Percentage
   b. Beverage Cost Percentage
10. Food Sales Statistics and Analysis
    a. Food Sales Analysis by Meal Period
    b. Food Sales Analysis by Dining Facility
    c. Average Food Check
    d. Average Food Sale per Seat
    e. Seat Turnover
11. Beverage Sales Statistics
    a. Beverage Sales by Meal Period
    b. Beverage/Food Sales Ratio
    c. Beverage Sales by Type
    d. Beverage Sales by Facility

Chapter 10: Hotel Accounting and Financial Analysis

1. Income Statement for Stockholders and Other External Users
   a. Revenue Section of the Income Statement
   b. Expense Section of the Income Statement
   c. Income Before Income Taxes, Income Taxes, and Net Income
2. Income Statement for Internal Users
   a. Revenue Section of the Summary Operating Statement
   b. Departmental Expenses
   c. Total Departmental Income
   d. Undistributed Operating Expenses
   e. Gross Operating Profit, Management Fees, Income Before Fixed Charges                                  f. Fixed Charges
   g. Net Operating Income
   h. Less: Replacement Reserves
   i. Adjusted Net Operating Income
3. The Income Statement Package for Internal Users
4. Operating Ratios
   a. Average Room Rate
   b. Occupancy Percentage
   c. Average Food Check
   d. Food Cost Percentage
   e. Beverage Cost Percentage
   f. Labor Cost Percentage
5. Hotels with Casino Departments
   a. Statement of Gaming Operations
   b. Revenue Accounting
   c. Expense Accounting

Chapter 11: Depreciation and Amortization Methods

1. Depreciation
   a. Straight-Line Depreciation Method
   b. Declining Balance Depreciation Method
   c. MACRS Depreciation Method
   d. FASB vs. IRS Depreciation Methods
2. Amortization
   a. IRS vs. FASB Regarding Intangible Assets

Chapter 12: How to Analyze Hospitality Financial Statements

1. Financial Statement Package
   a. Notes to the Financial Statements
   b. Accountant’s Letter
2. The Money Illusion
   a. Revenue, Expenses, and Net Income
   b. Assets, Liabilities, and Equity
3. Overview of Analytical Methods
4. The Income Statement
   a. Reading the Income Statement
   b. Common-Size Analysis
   c. Comparative Analysis
   d. Ratio Analysis
5. The Balance Sheet
   a. Reading the Balance Sheet
   b. Common-Size Analysis
   c. Comparative Analysis
   d. Ratio Analysis
6. Statement of Cash Flows
   a. Reading the SCF
   b. Cash Flows from Operating Activities
   c. Cash Flows from Investing Activities
   d. Cash Flows from Financing Activities

Chapter 13: Annual Report to Shareholders

1. Governmental Authority on Reporting by Public Companies
   a. The SEC
   b. The Sarbanes-Oxley Act of 2002                                               c. The 10-K Report
2. Annual Report to Shareholders: An Overview
   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. CEO and CFO Certification of the Annual Report

Chapter 14: Credit and Debit Cards

1. Evaluating Credit Card Acceptance
2. Processing Credit Card Transactions: The Merchant Account
   a. Selling on the Internet
   b. Getting a Merchant Account
3. Point-of-Sale Systems
   a. Components of a Point-of-Sale System
4. Real-Time Credit Card Processing
   a. Payment Gateways
5. Credit Card Fraud
   a. Authorization and Authentication
   b. Cardholder Disputes and Charge-backs
   c. Reserve or Hold-back
6. Merchant Account Fees and Charges

Chapter 15: Introduction to Budgeting and Forecasting

1. What Is a Budget?
   a. The Budgeting Process
   b. Assembling a Budget
   c. Budgeting Guidelines
2. Sales Forecasting
   a. Forecasting Considerations for a New Business
   b. Forecasting Considerations for an Existing Business
   c. Percentage Method of Forecasting Sales
   d. Forecasting Rooms Sales
   e. Forecasting Food Sales
3. The Relationship of Expenses to Volume
   a. Total Cost Equation
4. Variable Expenses
   a. Budgeting a Variable Expense
5. Fixed Expenses
   a. Budgeting a Fixed Expense
6. Semi-Variable Expenses
   a. Budgeting a Semi-Variable Expense
7. Break even Point
   a. Break even Point Formula
   b. Profit Target

Chapter 16: Internal Control of Cash

1. Definition and Objectives of Internal Control
   a. Limitations of Internal Control
2. Internal Control of Cash Receipts
   a. Cashier’s Daily Report
3. Internal Control of Cash Disbursements
4. Bank Reconciliation                                                                     
   a. Bank Statement
   b. Reconciling Items
   c. Bank Reconciliation Procedure
   d. Example of a Bank Reconciliation
   e. Journal Entries

Chapter 17: Business Math Topics for Hospitality Managers

1. Interest Expense
   a. If Time Is Stated in Full Years
   b. If Time Is Stated in Full Months
   c. If Time Is Stated in Days
   d. Working with Fractional Interest Rates
2. Cash Discounts
   a. 2/10,n/30 Discount Term
   b. 2/10,n/30 ROG Discount Term
   c. 2/10,n/30 EOM or 2/10,n/30 PROX Discount Terms
   d. Freight Charges
   e. Extended Cash Discount Terms
3. Compound Value
4. Present Value
5. Compound and Present Values with Annuities