1. Introduction to Hotel Accounting by Esther Lau, Controller

2. Many people associate accounting with mathematics and numbers
Many people associate accounting with mathematics and numbers. However, accounting is much more than numbers.
Accounting assists in providing answers to many questions that hospitality managers raise, such as following:

3. How much cash is available to pay bills?
What was the total payroll last pay period/ last month?
How much does a current guest owe the hotel?
(The answer is in the guest ledger.)
What amount of food and beverage inventory was on hand at the beginning of the month?
What are payroll costs as a percentage of room sales?
What is the ratio of food and beverage sales to room sales this past month?
How much do we owe our vendors?
How much do our guests owe us?
(Accounts Receivable and Guest Ledger)

4. ACCOUNTING is form of COMMUNICATION
In other words, not only must information be accumulated and properly summarized, it must be communicated in a way that users understand.
e.g. Income Statement, Statement of Cash Flow

5. Basic Accounting Principles: Generally Accepted Accounting Principles (GAAP)
For example:
Consistency
e.g. Same depreciation method for fixed assets such as all equipments, building and furniture and fixtures.

6. Matching principle
Matching principle refers to relating expenses to revenues.
E.g. of accrual of payroll at the end of the month. Assume that employees have worked the last few days of the month and that the next pay date falls in the following month. The matching principle dictates that the unpaid payroll for the period be recognized both as expenses during the current accounting period and as a liability.

7. Full Disclosure
Full Disclosure
Might include the accounting method used, changes in the accounting methods, and unusual items.

8. Fundamental Accounting Equation:
Assets = Liabilities + Owner’s Equity

9. Asset Accounts: Cash Accounts Receivable Notes Receivable
Accrued Interest Receivable
Marketable Securities
Inventories of Merchandise
Office Supplies (Inventories)
Other Prepaid Expenses
Investments
Property and Equipment

10. Liability Accounts: Notes Payable Accounts Payable
Taxes Charged to Guests and Withheld from Employees
Incomes Taxes Payable
Accrued Expenses
Unearned Income (e.g. Advance Deposit)
Mortgage Payable

11. Owners’ Equity Accounts:
Capital Account

12. Revenues Accounts Room Sales Food Sales Beverage Sales Gift Shop Sales
Banquet Sales
Telephone Sales
Parking Sales
Space Rental Sales
Interest Income
Dividend Income

13. Expenses Accounts Food Expenses Beverage Expenses Wages Expenses
Salaries Expenses
Payroll Taxes
Supplies
Rent
Cleaning Supplies
Guest Supplies
Utilities – Electricity, Gas, Fuel, Water
Insurance – Health, General Liabilities
Interest
Advertising Expense
Travel Expenses
Property Taxes
Depreciation Expenses
Income Taxes

14. Debit and Credit =X= Increase and Decrease
T-Accounts
Debit and Credit
=X=
Increase and Decrease

15. Assets + -- Liabilities -- + Owners’ Equity -- + Revenues -- +
DR CR
Assets
Liabilities
Owners’ Equity -- +
Revenues
Expenses

16. Examples and Exercises
Examples and Exercises for posting journal entries (recording business transactions)

17. How to Post Entries Sales of Food for $200 Sales of Beverage for $150
Received in Cash for $120
Received in Credit Card for $230
Revenue of Food
Revenue of Beverage
200
150
CASH
Credit Card
120
230

18. Examples for Posting Entries
Food Inventory
Beverage Inventory
3500
2500
CASH
Accounts Payable
Purchase $3500 Food and will pay in one month
Spend $2500 in cash to purchase Liquor

19. Exercises of Posting Entries
Beginning of this month: We Have
$10,000 in cash
$50,000 in accounts receivable
$15,000 in food inventory
$20,000 in beverage inventory
$5,000 in accounts payable due on 15th

20. General Ledger
A group of accounts is defined as a ledger. The general ledger is the group of general accounts that includes accounts for assets, liabilities, owners’ equity, revenues, expenses, and owner’s drawing.