Hospitality Financial Accounting Week 1 Part 1 Hospitality Accounting in Action Matakuliah: V0232 – Akuntansi Keuangan Hotel Tahun: 2009

1-1 Accounting Process Identification (Select economic events/ transactions) Recording (Record, classify, and summarize) Communication (Prepare reports; analyze and interpret) Internal Users External Users Investors/creditors Present & potential Investors Creditors Other Users Taxing authorities Regulatory agencies Labor unions Economic planners Management Managers, supervisors, and company officers

1-2 Bookkeeping vs. Accounting Bookkeeping Involves only the recording of economic events Just one part of the accounting process Accounting Involves identifying, recording, and communicating economic events Types of Accounting: Financial Managerial

1-3 Assumptions Monetary Unit Assumption Only transaction data that can be expressed in terms of money can be included in the accounting records Economic Entity Assumption Activities of the entity must be kept separate from activities of the owner

1-4 The Accounting Equation ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY Assets are resources that possess future economic benefits. Liabilities are creditor claims on the assets and represent the debts and obligations of the entity. Stockholders’ equity is the stockholder’s residual claim on total assets. TOTAL ASSETS Stockholder’s claims on assets Creditor claims on assets =+

1-5 The Accounting Cycle Steps in the Accounting Cycle  Analyzing Transactions  Journalizing  Posting  Trial Balance  Adjustments  Adjusted Trial Balance  Financial Statements  Closing Entries  Post Closing Trial Balance

1-6 Uniform Systems Hotels Uniform System of Accounts for the Lodging Industry Clubs Uniform System of Financial Reporting for Clubs Restaurants Uniform System of Accounts for Restaurants Spas Uniform System of Financial Reporting for Spas

Hospitality Financial Accounting Part 2 Accounting Principles

2-1 Conceptual Framework CONSTRAINTS Objectives of Financial Reporting Qualitative Characteristics of Accounting Information Elements of Financial Statements Operating Guidelines AssumptionsPrinciples CONSTRAINTS

2-2 Qualitative Characteristics of Accounting Information UsefulFinancial Information has: 1. Predictive value 2. Feedback value 3. Timely Relevance 1. Verifiable 2. Faithful representation 3. Neutral Reliability ComparabilityandConsistency

2-3 Operating Guidelines Detailed Guidelines for Solving Practical Problems 4. Going Concern 3. Time Period 2. Monetary Unit 1. Economic Entity 4. Cost 3. Full Disclosure 2. Matching 1. Revenue Recognition MaterialityConservatism CONSTRAINTSand ASSUMPTIONSPRINCIPLES

2-4 Recording Business Transactions 1.Invested $8,000 in his business in exchange for common stock. 2.Purchased $500 of supplies for cash. 3.Purchased $4,000 of equipment on account. 4.Received $3,000 cash for consulting services. 5.Paid salaries of $800 6.Paid the first month’s rent of $ Paid $1,000 owned to a creditor. 8.The corporation paid a dividend of $1,500 in cash to Sam Doty, the stockholder. A. Review of Selected Transactions Mr. Sam Doty opened and incorporated a hospitality consulting firm during the month of September and provided you with the following data. Instructions: Prepare the tabular summary for the transactions above.

2-4 Recording Business Transactions (continued)Answer: Summary of Transactions Month of September 2008 Assets=Liabilities+Stockholders’ Equity Trans- action Cash+ Sup- plies + Equip-ment = Accounts Payable + Common Stock Retained Earnings (1)+$8,000 Investment (2) (3)+$4,000 (4)+3,000 Service Revenue (5)-800 Salary Expense (6)-200 Rent Expense (7)-1,000 (8)-1,500 Dividends $7,000+$500+$4,000=$3,000+$8,000$500

2-4 Recording Business Transactions (continued) 1.Prepare the Income Statement and Retained Earnings Statement from the Stockholders’ Equity Column of the Summary of Transactions for the month of September. B. Financial Statement Relationship to Transactions and Balances Stockholders’ Equity +$8,000(Investment by Stockholders) +3,000(Service Revenue) -800(Salary Expense) -200(Rent Expense) -1,500(Dividends) $8,500

2-4 Recording Business Transactions (continued) Sam Doty Hospitality Consultant Income Statement For Month Ended September 30, 2008 Revenues Service revenue$3,000 Expenses Salary expense$800 Rent expense 200 Total expenses 1,000 Net income$2,000 Sam Doty Hospitality Consultant Retained Earnings Statement For Month Ended September 30, 2008 Retained Earnings, September 1$ -0- Add: Net income 2,000 Less: Dividends$1,500 Retained Earnings, September 30$ 500 Answer:

2-4 Recording Business Transactions (continued) 2.Prepare the Balance Sheet from the Month-end Balances of the Summary of Transactions. Assets Cash + Supplies + Equip. Cash + Supplies + Equip. $7,000 + $500 + $4,000 LiabilitiesStockholders’Equity Accounts Payable $3,000 Common Stock $8,000R.E.$500 = = =

2-4 Recording Business Transactions (continued) Sam Doty, Hospitality Consultant Balance Sheet September 30, 2008 Assets Cash$ 7,000 Supplies 500 Equipment 4,000 Total assets$11,500 Liabilities and Stockholders’ Equity Liabilities Accounts payable$ 3,000 Stockholders’ Equity Common stock 8,000 Retained earnings 500 Total liabilities & stockholders’ equity$11,500 Answer:

2-4 Recording Business Transactions (continued) 3.Prepare the Statement of Cash Flows from the Cash Column of the Summary of Transactions for the month of September. Sam Doty, Hospitality Consultant Statement of Cash Flows for Month Ended September 30, 2008 Cash flows from operating activities Cash receipts from customers$3,000 Cash payments for expenses 1,000 Net cash provided by operating activities$2,000 Cash flows from investing activities Purchase of supplies (500) Payment for equipment(1,000) (1,500) Cash flows from financing activities Sale of common stock$8,000 Dividends paid (1,500) 6,500 Net increase in cash 7,000 Cash at the beginning of the period 0 Cash at the end of the period$7,000

2-5 Analyzing Transactions Identify the various transactions indicated by the information provided: 1.CASH ACCOUNTS RECEIVABLE increased………………….. decreased_________________ 2.RENT EXPENSE CASH increased………………….. decreased_________________ 3.SUPPLIES ACCOUNTS PAYABLE increased………………….. decreased_________________ 4.EQUIPMENT CASH increased………………….. decreased_________________ 5.ACCOUNTS RECEIVABLE REVENUE increased………………….. decreased_________________ 6.DIVIDENDS CASH increased………………….. decreased_________________

2-5 Analyzing Transactions (continued) Continue exercise by asking students for a transaction which increases the following: Cash, Accounts Receivable, Supplies, Equipment, Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Common Stock Continue exercise by asking students for a transaction which decreases the following: Cash, Accounts Receivable, Supplies, and Cash, Accounts Receivable, Supplies, and Accounts Payable

2-5 Analyzing Transactions (continued) 1.Collection of an accounts receivable. 2.Payment of the current month’s rent. 3.Purchase of supplies on account. 4.Purchase of equipment for cash. 5.Rendering of services for a customer on account. 6.The declaration of a cash dividend. Answer :