Chapter 2: Accounting Fundamentals Review...........................................13

Summary managerial accounting for the hospitality industry 2nd edition lea r dopson hayes 9781119299653 1 / 6

Summary managerial accounting for the hospitality industry 2nd edition lea r dopson hayes 9781119299653 Contents Chapter 1: Hospitality Industry Accounting.................................................4 1.1 Unique Aspects of the Hospitality Industry........................................4 1.2 The Purpose of Accounting in the Hospitality Industry.......................5 1.3 Branches of Accounting......................................................................6 1.4 Why Hospitality Managers Use Managerial Accounting......................7 1.5 The Uniform System of Accounts.......................................................9 1.6 Ethics and Hospitality Accounting....................................................11 Chapter 2: Accounting Fundamentals Review...........................................13 2.1 Bookkeeping and Accounting...........................................................13 2.2 The Accounting Equation..................................................................15 2.3 Recording Changes to the Accounting Equation...............................17 2.4 Generally Accepted Accounting Principles (GAAP)...........................19 2.5 The Hospitality Business Cycle.........................................................21 Chapter 3: THE INCOME STATEMENT .........................................................23 3.1 The Purpose of the Income Statement.............................................23 3.2 Income Statement Preparation.........................................................24 3.3 Income Statement Analysis..............................................................27 Chapter 4: The Balance Sheet...................................................................30 4.1 The Purpose of a Balance Sheet.......................................................30 4.2 Balance Sheet Formats.....................................................................33 4.3 Components of the Balance Sheet...................................................37 4.4 Balance Sheet Analysis....................................................................40 Chapter 5: The Statement of Cash Flows..................................................46 5.1 Understanding Cash Flows...............................................................46 5.2 The Purpose of the Statement of Cash Flows (SCF).........................46 5.3 Sources and Uses of Funds...............................................................48 5.4 Creating the Statement of Cash Flows.............................................55 5.5 Statement of Cash Flows Analysis....................................................59 Chapter 6: Ratio Analysis..........................................................................62 6.1 Purpose and Value of Ratios.............................................................62 6.2 Types of Ratios.................................................................................62 2 / 6

Summary managerial accounting for the hospitality industry 2nd edition lea r dopson hayes 9781119299653 6.3 Comparative Analysis of Ratios........................................................68 6.4 Ratio Analysis Limitations................................................................69

CHAPTER 7: FOOD AND BEVERAGE PRICING .............................................72

7.1 Factors Affecting Menu Pricing.........................................................72 7.2 Assigning Menu Prices......................................................................74 7.3 Menu Price Analysis..........................................................................75

CHAPTER 8: REVENUE MANAGEMENT FOR HOTELS ...................................78

8.1 Establishing Room Rates..................................................................78 8.2 Revenue Management ......................................................................80 8.3 Non-Room Revenue..........................................................................82

CHAPTER 9: MANAGERIAL ACCOUNTING FOR COSTS ................................84

9.1 The Concept of Cost.........................................................................84 ...............................................................................................................84 9.2 Types of Costs..................................................................................84 9.3 Cost/Volume/Profit (CVP) Analysis....................................................87

CHAPTER 10: FORECASTING IN THE HOSPITALITY INDUSTRY ....................91

10.1 The Importance of Accurate Forecasts...........................................92 10.2 Forecast Methodology....................................................................92 10.3 Utilizing Trend Lines in Forecasting................................................94

CHAPTER 11: BUDGETING AND INTERNAL CONTROLS ..............................96

11.1 Importance of Budgets...................................................................96 11.2 Types of Budgets............................................................................97 11.3 Operations Budget Essentials.........................................................98 11.4 Developing an Operations Budget..................................................99 11.5 Monitoring an Operations Budget................................................100 11.6 Cash Budgeting............................................................................100 11.7 Managing Budgets Through Internal Control................................101

CHAPTER 12: CAPITAL INVESTMENT, LEASING, AND TAXATION ...............102

12.1 Capital Budgeting.........................................................................102 12.2 Capital Investment.......................................................................103 12.3 Financing Alternatives..................................................................104 12.4 Taxation........................................................................................105 3 / 6

Summary managerial accounting for the hospitality industry 2nd edition lea r dopson hayes 9781119299653

Chapter 1: Hospitality Industry Accounting

1.1 Unique Aspects of the Hospitality Industry The hospitality industry encompasses a diverse range of service-oriented enterprises, including hotels, restaurants, resorts, clubs, and other lodging and food service operations. Unlike manufacturing or retail businesses, hospitality organizations primarily produce intangible experiences rather than tangible goods. This characteristic significantly influences the way financial information is recorded, analyzed, and interpreted.One defining feature of the hospitality industry is its perishability. Rooms that go unsold or tables that remain empty on a given night represent lost revenue opportunities that cannot be recovered.This time-sensitive nature of inventory requires managers to monitor performance indicators such as occupancy rates, average daily rate (ADR), and revenue per available room (RevPAR) to ensure optimal capacity utilization.Another distinctive aspect is the high proportion of fixed costs. Hotel operations, for instance, must maintain facilities, utilities, and staffing levels regardless of short-term fluctuations in demand. This cost structure amplifies the importance of accurate forecasting and budgeting, as small changes in revenue can have a disproportionate impact on profitability.The labor-intensive nature of the industry also shapes its accounting practices. Payroll expenses often represent the largest single cost category, making labor cost control a central focus of managerial accounting systems. Additionally, employee turnover rates tend to be high, requiring consistent attention to training and human resource accounting.Finally, hospitality organizations often operate across multiple departments and revenue centers, such as rooms, food and beverages, spas, and events. Each department contributes differently to overall profitability, necessitating detailed departmental accounting and performance measurement.Consequently, financial managers in hospitality must integrate both operational and financial data to make informed decisions about pricing, service offerings, and cost allocation. 4 / 6