Hospitality Industry Managerial Accounting

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Hospitality Industry Managerial Accounting

• HRT 374
• Chapter 2
• Don St. Hilaire

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Chapter 2 The Balance Sheet

• Explain the purposes of the balance sheet.
• Balance of assets and claims to assets called
  liabilities and owners equity.
• Expresses balance at a given date.
• Reveals ability to pay bills and liquidity.
• Prepared at end of accounting period.

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Ch. 2 The Balance Sheet cont.

• Identify the 4 Limitations
• Does not reveal current value of assets.
• Fails to reflect certain assets, i.e. human
  resources.
• Reflects financial status for only one moment in
  time.
• Not exact.

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Ch. 2 Competencies cont.

• Identify elements of assets, liabilities, and
  owners equity that are presented on the balance
  sheet.
• Assets
• Current assets.
• Noncurrent receivables.
• Investments.
• Property and equipment (fixed)
• Other assets.

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Ch. 2 Competencies cont.

• Identify elements of assets, liabilities, and
  owners equity that are presented on the balance
  sheet continued
• Liabilities
• Current
• Long Term
• Owners Equity.

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Ch. 2 Competencies cont.

• Explain the use of footnotes in balance sheet.
• Full disclosure principle.

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Ch. 2 Competencies cont.

• Interpret Balance Sheets.
• Horizontal.
• absolute changes. ()
• relative changes. ()
• Comparative balance sheets.
• Vertical - each line item as a .
• Common-size balance sheets.