Hospitality Industry Managerial Accounting

1
Hospitality Industry Managerial Accounting

• HRT 374
• Chapter 3
• Don St. Hilaire

2
Chapter 3 The Income Statement

• Describe revenues, expenses, gains, and losses as
  they are presented on the income statement.
• Revenues Food, beverage, rooms sales, rental,
  interest, dividend income.

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Chapter 3 The Income Statement

• Describe revenues, expenses, gains, and losses as
  they are presented on the income statement.
  Continued
• Expenses -
• Use of assets.
• Increase in liabilities to produce products and
  services.
• Labor
• Cost of goods sold.

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Chapter 3 The Income Statement

• Describe revenues, expenses, gains, and losses as
  they are presented on the income statement.
  Continued
• Gains and losses from incidental transactions.

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Chap. 3 Income Statement

• Distinguish between income statements prepared
  for internal users and those prepared for
  external users
• Summary income statement -external.
• Income statement and supplemental schedules for
  management - internal.

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Ch. 3 Income Statement

• Cost of Sales (cost of goods sold) - Calculation
• Beginning Inventory
• Inventory Purchases
• Cost of Goods Available
• - Ending Inventory
• Cost of Goods Consumed
• - Goods used internally
• Cost of Goods Sold

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Ch. 3 Income Statement

• Identify the differences between the departmental
  statements prepared for profit centers and those
  prepared for service centers in a hospitality
  operation.
• Profit center statements
• Revenues.
• Cost of sales.
• Labor expenses.
• Other direct expenses.

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Ch. 3 Income Statement

• Identify the differences between the departmental
  statements prepared for profit centers and those
  prepared for service centers in a hospitality
  operation.
• Service center statements
• Labor expenses.
• Other expenses.

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Ch. 3 Income Statement

• Distinguish between departmental revenue and
  departmental income, and describe the relative
  profitability of operated departments at a
  typical hotel.
• Departmental revenues less direct expenses equal
  income.
• Departmental gross profits.
• Rooms department is most profitable.

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Ch. 3 Income Statement

• State how a hospitality operations income
  statement may be interpreted by means of
  horizontal and vertical analyses and base-year
  comparisons.
• Horizontal absolute and relative differences.
• Comparative income statements.
• Vertical each line item as a of total sales.
• Common-size income statements Base-year
  comparisons

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Ch. 3 Income Statement

• Understand and use the most current version of
  the uniform system of accounts applicable to the
  lodging industry.
• State 4 advantages to using a uniform system of
  accounts in hospitality operations.
• Turnkey system.
• Permits comparison among different operations
  through a uniform classification and presentation
  of operating results.

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Ch. 3 Income Statement

• Understand and use the most current version of
  the uniform system of accounts applicable to the
  lodging industry. Continued
• State 4 advantages to using a uniform system of
  accounts in hospitality operations. Continued
• Time-tested.
• Adaptable for small and large operations.

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Ch. 3 Income Statement

• Uniform System of Accounts of the Lodging
  Industry (USALI- created in 1996) income
  statement.
• Designed to be used at the property level rather
  than the corporate level of a hotel.

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Ch. 3 Income Statement

• Corporate level where more than one property is
  involved will be considerably different
• Includes sale of properties.
• Includes corporate overhead.
• Includes other items not shown an individual
  propertys statements.

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Ch. 3 Income Statement

• Format is based on Responsibility Accounting
• Designed to focus attention on departmental
  results such as rooms and food departments.
• Provides separate line reporting by profit center.

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Ch. 3 Income Statement

• Format is based on Responsibility Accounting
  continued
• Departmental statements supplementary to the
  income statement are referred to as schedules and
  provide management with detailed information
  about the operated departments and service
  centers.

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Ch. 3 Income Statement

• General Format
• Revenues
• Less Direct operating expenses -(cost of goods
  sold, direct labor, other direct)
• Equals Departmental Operating Income
• Less Overhead expenses. - ( undistributed
  operating expenses - such as marketing,
  management fees, and fixed charges)
• Equals Net Income

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Ch. 3 Income Statement

• Uniform System of Accounts for Restaurants (USAR)
  income statement.
• Developed by the National Restaurant Association
  (NRA).
• Benefits similar to those of USALI.