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GUEST ACCOUNTING. Contents  Accounting Basics  Guest Accounting  Accounting Entries  Accounting Documentation  Guest Accounting and the Front Desk.

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Presentation on theme: "GUEST ACCOUNTING. Contents  Accounting Basics  Guest Accounting  Accounting Entries  Accounting Documentation  Guest Accounting and the Front Desk."— Presentation transcript:

1 GUEST ACCOUNTING

2 Contents  Accounting Basics  Guest Accounting  Accounting Entries  Accounting Documentation  Guest Accounting and the Front Desk

3 Accounting Basics  The accounting equation is the most basic of all the accounting principles for the dissemination of information. It states that: An asset is an economic resource A liability is an economic obligation Owner’s equity is the level of ownership the owner has in the operation Assets = Liabilities + Owner’s Equity

4 Accounting Basics (Cont….)  The accounting equation must always be in balance, the two sides of the equal (=) sign must themselves be equal  This equation can show at a glance the financial state of any business, however does not show great detail  Because of the limited detail, the accounting equation is used more often to illustrate details of smaller business entities

5 Accounting Basics (Cont….)  Owner-operated hotels would use the accounting equation most often  An example of the accounting equation used in a small owner-operated hotel:  Here, the Wilson family can claim ownership (or equity) in this operation of $136,500 Wilson Family Inn $450,000 - $313,500 = $136,500 (assets) – (liabilities) = owner’s equity

6 Accounting Basics (Cont….)  For more financial detail, lenders, investors, shareholders and others look into a hotel’s balance sheet  The balance sheet serves to summarize a hotel’s financial situation on a given date, and serves as a financial “snapshot” of the current state of assets, liabilities and equity  Continuing our example, the Wilson family’s balance sheet for their hotel could look like this:

7 Accounting Basics (Cont….) Wilson Family Inn Balance Sheet - Dec 31, 2010 AssetsLiabilities Cash$35,000Accounts payable$12,000 Cleaning supplies$2,500Salaries payable$4,500 Linen$1,100Taxes payable$2,000 FF&E$250,000Notes payable$295,00 Land$55,000Total Liabilities$313,500 Building$106,000 Owners Equity Office Supplies$400Wilson, capital$136,500 Total Assets$450,000Total equity and liability $450,000

8 Guest Accounting  Most hotels use traditional accounting concepts to organise and track guest information and other data  Tracking of financial transactions within the front office is called guest accounting  The term “ledger” is used to identify what information is contained in a certain revenue tracking vehicle  The vehicles used to track the revenues and charges within the front office are the guest ledger and the city ledger

9 Guest Accounting (Cont…)  Each of these ledgers serves as an accounting vehicle for a hotel to track who it owes money to and who owes it money  The two primary accounting entries used to track these charges and credits are the debit and credit  The debit has a positive affect on the total balance of a guest account and the credit has a negative effect  Front office employees deal with these credits and debits on a daily basis

10 Guest Ledger  The guest ledger is an all encompassing term used to track hotel transactions primarily before and during a guest’s or group’s stay  The guest ledger is also used to track the daily transactions of each revenue-generating side of the hotel triangle (room, catering, and outlet/ancillary sales)  Hotels will create an account within the guest ledger to track the inflow and outflow of revenue

11 Guest Ledger (Cont…)  The types of accounts may vary in name from hotel to hotel but the functions of each are generally consistent, the most frequently used types are  House Account – serves as a perpetual account to track recurring transactions that occur within the hotel  Guest Account – each individual guest account will track debits and credits incurred prior to and during the stay

12 Guest Ledger (Cont…)  Master Account – closely mirrors the individual guest account, the main difference is that a master account encompasses registration/accounting for an entire group, not individual attendees.  Individual guest and group charges related to a specific group based on billing arrangements are routed to the master account as applicable  Routing is the process where credits/debits incurred by one account are manually or automatically transferred to another account

13 City Ledger  The city ledger is used to track revenues due to the hotel, these revenues are called receivables  The employee(s) of the Accounts Receivables area of the accounting department will manage the city ledger by creating a city ledger account in the accounting menu of the PMS for each guest ledger account that checks out with a balance due to the hotel

14 City Ledger (Cont…)  The guest ledger must be cleared of noncurrent accounts to make way for new arrivals  A noncurrent account is measured by its departure date, which is directly tied to the creation of guest history accounts  If there is a balance outstanding on an “aged” account, a city ledger is created to track those revenues  Hotels depend on revenue to cover their costs so within the city ledger an “aging statement” will track how long reach receivable has remained uncollected

15 Accounting Entries  The process of updating the accounting menu is achieved through a series of entries  Hotel accounting entries serve specific purposes to accurately document each transaction  The front office accounting formula summarises how these entries are tallied up: Beginning Balance + Charges – Credits = Ending Balance

16 Guest Accounting and the Front Desk  Front desk employees may handle cash throughout their day – guests may choose to pay with cash even though they put down a credit card number at check in  Most hotels allow their guests to cash personal cheque of a certain amount, and often exchange foreign currency as well  Front desk agents must be able to handle these transactions so each has their own “individual bank”

17 Guest Accounting and the Front Desk (Cont…)  Each bank is audited by the general cashier to ensure that proper accounting procedures are adhered to and to avoid fraud  Banks are counted prior to each shift to ensure that the minimum reserve is there and at the end of each shift, a “cash out” process is undertaken to match all transactions with what is now in each individual bank  Front desk employees “drop” their excess cash to the general cashier, who then replenishes individual banks if needed

18 Shift Closing  Each desk agent will run an report from the PMS called an employee shift closing report  Each employee is assigned an identification number within the PMS to track his/her transactions  When each agent on a shift has completed his or her own employee shift report, the manager may conduct an entire shift closing which will summarise all the transactions completed by each shift member


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