REVIEWChapter 13

Matakuliah : V0282 - Manajemen Akuntansi HotelTahun : 2009 - 2010

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Competencies forIntroduction to Managerial

Accounting1. Describe characteristics of the hospitality

industry and identify the major function of hospitality accounting.

2. Apply generally accepted accounting principles to hospitality situations.

3. Distinguish between cash basis accounting and accrual basis accounting.

4. Describe the six branches of accounting.

(continued)

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Competencies forIntroduction to Managerial

Accounting5. Explain the fundamental accounting equation

and identify normal account balances for various types of accounts.

6. Explain the nine steps in the accounting cycle.

7. Describe four basic forms of business organization.

(continued)

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Generally Accepted Accounting Principles

• Cost • Business entity • Continuity of the business unit (going concern)• Unit of measurement • Objective evidence• Full disclosure • Consistency • Matching • Conservatism • Materiality

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The Six Branches of Accounting

• Financial accounting

• Cost accounting

• Managerial accounting

• Tax accounting

• Auditing

• Accounting systems

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Fundamental Accounting Equation

Assets = Liabilities + Owners’ Equity

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Normal Account Balances

Asset — debit

Liability — credit

Owners’ Equity Permanent — credit

Owners’ Equity Revenue — credit

Owners’ Equity Expense — debit

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The Accounting Cycle

1. Record transactions in journals.

2. Post amounts from journals to ledger accounts.

3. Prepare a trial balance.

4. Prepare adjusting entries.

5. Post adjusting entries.

6. Prepare an adjusted trial balance.

7. Prepare the financial statements.

8. Close the revenue and expense accounts.

9. Prepare the post-closing trial balance.

The Balance Sheet

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Competencies forThe Balance Sheet

1. Explain the purposes of the balance sheet.

2. Identify the limitations of the balance sheet.

3. Define the various elements of assets, liabilities, and owners’ equity as presented on the balance sheet.

4. Explain the use of footnotes in balance sheets.

5. Interpret balance sheets using horizontal and vertical analysis as well as base-year comparisons.

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Major Elements of the Balance Sheet

• Assets: current assets, noncurrent receivables, investments, property and equipment (fixed), and other assets

• Liabilities: current and long term

• Owners’ equity

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Typical Components of Current Assets

• Cash

• Marketable securities

• Receivables

• Inventories

• Amounts due from owner, management company, or related party

• Prepaid expenses

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Typical Components of Current Liabilities • Notes payable

• Accounts payable • Accrued expenses • Advance deposits • Income taxes payable• Deferred income taxes• Amounts due to owner, management company or

related party• Current maturities of long-term debt

The Income Statement

1. Describe revenues, expenses, gains, and losses as presented on the income statement.

2. Distinguish between income statements prepared for internal users and those prepared for external users.

3. Describe the contents of an income statement based on the Uniform System of Accounts for the Lodging Industry (USALI).

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(continued)

4. Identify the differences between departmental income statements prepared for profit centers and those prepared for service centers in a hospitality operation.

5. Interpret income statements using horizontal and vertical analysis as well as base-year comparisons.

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(continued)

• Revenue—the inflow of assets, reduction of liabilities, or both resulting from the sale of products and services.

• Expense—the outflow of assets, increase of liabilities, or both incurred during the production and rendering of products and services.

• Gain—an increase in assets, reduction in liabilities, or both resulting from an incidental transaction or a transaction that is neither a revenue nor an investment by owners.

• Loss—a decrease in assets, increase in liabilities, or both resulting from an incidental transaction or a transaction that is neither an expense nor a distribution to owners.

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Revenues– Departmental Expenses

Total Departmental Income– Undistributed Operating Expenses

Gross Operating Profit– Management Fees

Income Before Fixed Charges– Fixed Charges

Net Operating Income– Replacement Reserves

Adjusted Net Operating Income19

Beginning inventory

– Inventory purchases

Goods available for sale

– Ending inventory

Cost of goods consumed

– Goods used internally

Cost of goods sold

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• Rooms

• Food

• Beverage

• Telecommunications

• Rentals and Other Income

• Golf Course and Pro Shop

• Health Club/Spa

• Parking Garage21

• Administrative and General

• Sales and Marketing

• Property Operation and Maintenance

• Utility Costs

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The Statement of Cash Flows

1. Explain the purposes of the statement of cash flows and how the statement is used by hospitality managers.

2. Identify cash flows as reported on the statement of cash flows in terms of operating activities, investing activities, and financing activities.

3. Explain the direct and indirect methods of converting net income to net cash flow from operations.

4. Describe the four-step approach to preparing the statement of cash flows.

24(continue

d)

5. Identify issues involved in the analysis of statements of cash flow.

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(continued)

A hospitality operation typically has cash inflows and outflows related to three activities:

– Operating activities

• Investing activities

– Financing activities

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1. Determine the net cash flows from operating activities.

2. Determine the net cash flows from investing activities.

3. Determine the net cash flows from financing activities.

4. Present the cash flows by activity on the SCF.

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Ratio Analysis

1. Identify standards against which the results of ratio analysis may be compared.

2. Explain the function and purposes of ratio analysis.

3. Identify common classes of ratios and describe the general purpose of each.

4. Calculate common liquidity ratios and describe how creditors, owners, and managers view them.

5. Calculate common solvency ratios and describe how creditors, owners, and managers view them.

29(continued)

6. Calculate common activity ratios and describe how creditors, owners, and managers view them.

7. Calculate common profitability ratios and describe how creditors, owners, and managers view them.

8. Calculate common operating ratios and explain how managers use them to evaluate operational results.

9. Summarize the limitations of ratio analysis, describe the usefulness of financial ratios, and explain how computers can be used in ratio analysis.

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(continued)

• Ratios from a past period

• Industry averages

• Budgeted or planned ratios

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• Managers use ratios to monitor operating performance and evaluate their success in meeting goals.

• Creditors use ratios to evaluate the solvency of a business and to assess the risk of future loans.

• Investors and potential investors use ratios to evaluate the performance of a business and the business’s ability to meet the investors’ specific goals.

• Ratios reveal important information that may not be obvious or apparent in the financial statements.

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• Liquidity

– Solvency

• Activity

– Profitability

» Operating

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• Current ratio

• Acid-test ratio

• Operating cash flows to current liabilities ratio

• Accounts receivable turnover

• Average collection period

• Working capital turnover

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• Solvency ratio

• Debt-equity ratio

• Long-term debt to total capitalization ratio

• Number of times interest earned ratio

• Fixed charge coverage ratio

• Debt service coverage ratio

• Operating cash flows to total liabilities ratio

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• Inventory turnover

• Property and equipment (fixed asset) turnover

• Asset turnover

• Paid occupancy percentage

• Complimentary occupancy

• Average occupancy per room

• Multiple occupancy

• Seat turnover

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• Profit margin

• Operating efficiency ratio

• Return on assets

• Gross return on assets

• Return on owners’ equity

• Return on common stockholders’ equity

• Earnings per share

• Price/earnings ratio

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• Mix of sales

• Average room rate (ADR)

• Revenue per available room (RevPAR)

• Revenue per available customer (RevPAC)

• Average food service check

• Food cost percentage

• Beverage cost percentage

• Labor cost percentage

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Basic Cost Concepts

1. Define various types of costs and explain how they change in response to changes in sales volume.

2. Use various methods to estimate the fixed and variable elements of a mixed cost.

3. Explain how fixed and variable cost factors influence purchasing decisions.

4. Distinguish direct costs from indirect costs.

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(continued)

5. Identify overhead costs and explain how they may be allocated to profit centers.

6. Describe controllable, differential, relevant, sunk, opportunity, average, incremental, and standard costs.

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(continued)

• Fixed costs—constant in the short run, unaffected by changes in sales volume

• Variable costs—costs that change in direct proportion to changes in sales volume

• Step costs—costs that are constant within a range of activity, but that change when different ranges of activity are reached

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(continued)

• Mixed costs—costs that have both fixed and variable elements; because of the variable element, these costs go up with sales volume

• Total costs—the sum of fixed, variable, step, and mixed costs

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(continued)

Cost Approaches to Pricing

1. Explain how the concept of price elasticity of demand applies to hospitality operations.

2. Describe informal approaches to pricing and identify factors that modify cost approaches to pricing.

3. Apply the ingredient and prime ingredient mark-up approaches to pricing food and beverage items.

4. Apply the $1 per $1,000 approach and the Hubbart Formula to pricing rooms.

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(continued)

5. Describe the reasons for and process of discounting room rates, and define and apply revenue management.

6. Use a bottom-up approach to pricing meals.

7. Demonstrate how changes in sales mix affect gross profit.

8. Explain the menu engineering approach to pricing food and beverage items.

9. Identify the advantages and disadvantages of integrated pricing by hospitality operations.

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(continued)

• Competitive pricing

• Intuitive pricing

• Psychological pricing

• Trial-and-error pricing

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• Prices charged in the past

• Guests’ perceptions of value

• Prices charged by the competition

• Price rounding

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Desired profits

+ Income taxes

+ Management fees

+ Fixed costs

+ Undistributed operating expenses

+ (–) Non-room departmental losses (profits)

+ Direct expenses of the rooms department

Required rooms department revenue

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Forecasting Methods

1. Describe the nature and limitations of forecasting and identify the kinds of patterns that emerge from historical data of hospitality operations.

2. Describe and apply various quantitative forecasting methods and explain how they differ from qualitative forecasting methods.

3. Identify factors hospitality operations should consider when selecting a forecasting method.

4. Describe the purpose of, and methods used to create, short-term forecasts in the lodging industry.

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Smoothing = Period 2 Forecast – Period 1 Forecast Constant Period 1 Actual Demand – Period 1 Forecast

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• Market research

• Jury of executive opinion

• Sales force estimates

• The Delphi method

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• Effectiveness of the method

• Costs of using the method

• Frequency with which forecasts will be updated

• Turnaround required for an updated forecast

• Size and complexity of the hospitality operation

• Forecasting skills of personnel involved

• The purposes for which the forecasts are made

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Capital Budgeting

1. Explain the relationship of capital budgeting to operations budgeting and identify types of capital budgeting decisions.

2. Calculate the time value of money.

3. Describe the relevance of cash flow to capital budgeting.

4. Describe and apply four capital budgeting models.

5. Explain the need for and process of capital rationing.

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• Meet government requirements.

• Reduce certain operational costs.

• Increase sales.

• Replace an existing fixed asset.

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F = A(1 + i)n

where F = future value

A= present amount

i = interest rate

n = number of years (or interest periods)

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P = F 1 (1 + i)n

where P = present amount

F = future amount

i = interest rate

n = number of years

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ARR = Average Annual Project IncomeAverage Investment

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Payback Period = Project Cost Annual Cash Flow

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Lease Accounting

1. Describe leases and explain the function of a lease agreement.

2. Describe some of the advantages and disadvantages of leases.

3. Identify and describe common lease provisions.

4. Differentiate between operating and capital leases and explain how they are accounted for.

5. Define leasehold improvements and sale and leasebacks.

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(continued)

6. Explain the effect that capital leases have on financial ratios.

7. Select and use relevant information to make buy-or-lease decisions

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(continued)

Advantages:

– Conserves working capital

– Possibly less red tape

– More frequent equipment changes possible

– Tax benefits passed on by the lessor

– Often less restrictive than lending agreements

– Less negative impact on financial ratios

– Capital budgeting may not be necessary

65(continued)

Disadvantages:

– Residual value benefits lessor

– Sometimes more expensive than purchasing

– Early disposal of lease can be costly

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(continued)

• Term of lease

• Purpose of lease

• Rental payments

• Renewal options

• Executory costs

• Inspection of lessee’s books

• Damage provisions

• Subleasing67

(continued)

• Lessee’s opportunity to make payments for which lessor is responsible

• Security deposits

• Indemnity clauses

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(continued)

• Title transfer provision

• Bargain purchase provision

• Economic life provision

• Value recovery provision

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