HTM 370 Chapter 1 - Hospitality Tourism Management 370...

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Hospitality & Tourism Management 370 CHAPTER 1 Introduction To Managerial Accounting I. Introduction The main role of a hotel’s accounting department is to provide information to internal and external users. o Shareholders (owners) and other investors (for example, financial institutions) are examples of external users. o Internal users include the managers of all internal departments. The accounting department must work closely with all other departments to help them meet their financial objectives. Usually, the head of the accounting department is the controller or the chief accounting executive. The hospitality industry uses the Uniform System of Accounts to report financial information to its internal and external users. Key functions of a hotel’s accounting department vary across properties. Specific functions depend upon property size and complexity. Some important functions of a hotel’s accounting department are: 1. General accounting 2. Accounts payables 3. Accounts receivables 4. Payroll 5. Budget controls 6. Audits 7. Food and Beverage Controls 8. Cashiers 9. Tax returns 10. Help in Purchasing and others depending upon property size II. Accounting Basics Generally Accepted Accounting Principles (GAAPs) 1. Cost principle: When a transaction is recorded, it is the transaction price or cost that establishes the accounting value for the purchased goods or services. For example, if you buy a dishwasher for $6,000 the book value of the dishwasher should be $6000 (its cost, not its market value).
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2. Going concern or continuity of business principle : Assume that a business is a going concern that will continue to live indefinitely, without liquidation. Such principle has important implications. Pre-paid expenses are treated as assets. Depreciation, an artificial account, is created to as an allowance (reduction in asset value) to safeguard against future problems in fixed assets.
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