Accounting Test 1

Front 1

Characteristics of the Hospitality Industry

Back 1

-Short distribution chain
-Seasonal in Nature
-Major Investment
-Labor Intensive
-Utilizes a uniform system of accounts

Front 2

Generally accepted accounting Principles

Back 2

-Cost
-Business Entity
-Going Concern
-Unit of Measurement
-Objective Evidence
-Full Disclosure
-Consistency
-Matching
-Conservatism
-Materiality (office Supplies

Front 3

Cash Basis & Accrual Basis accounting

Back 3

CB: Recognizes accounting transactions at the point of cash inflow or out flow
AB: Recognizes revenues when earned and expense when incurred

Front 4

(6) Branches of Accounting

Back 4

1.Finacial
2. Cost
3. Managerial
4. Tax
5. Auditing
6. Accounting Systems

Front 5

Fundamental Accounting Equation

Back 5

Assets= Liabilities+ Owners Equity

Front 6

Basic forms of business

Back 6

1. Sole Proprietorship
2. Partnership
3. Limited partnership
4. Corporation

Front 7

Chpt 2
Purpose of the Balance Sheet

Back 7

-Reflects finacial position as of a given date
-shows balance between assets and claims to assets by others
-revels the liquidity of or operation
-is prepared at the end of each accounting period

Front 8

Limitations of the balance sheet

Back 8

-Current values of some assets are not reflected
-Some valuable elements are not shown
-shows financial status for one moment in time
-some amounts are estimated

Front 9

Elements of a balance sheet

Back 9

Asset- Current: Cash, Receivables, inventories, property/land, equipment, other
Liabilities: Current (payroll), Long-Term
-Owners Equity

Front 10

Balance Sheet Interpretations

Back 10

-Horizontal Analysis: absolute and relative changes
-Comparative Balance Sheet
-Vertical: each line item as a %
- Common-Size Balance Sheet
-Base year comparisons

Front 11

Liquidity

Back 11

the ability of an operation to meet its short-term obligations by maintaining sufficient cash and/or investments easily convertible cash.

Front 12

Contents of a Income Statement

Back 12

Revenues: Food, Beverage, rooms & rentals
Expenses: Labor, Cost of goods sold, use of assets to produce products
Gains: Incidental Transactions
Losses: Incidental Transactions

Front 13

Internal users and external users

Back 13

Internal: Income statement with supplement schedule
External: summary income statements

Front 14

The uniform system of accounts

Back 14

1st section: Operated Departments
2nd Section: Undistributed operation expenses
3rd Section: Management fees, fixed charges, gains or losses, income tax

Front 15

Profit centers and service centers

Back 15

PC: Revenues, Cost of Sales, Labor expense, other expense
SC: Admin & Gen, HR, Utilitym Marketing, Oper & Maint, Transportation

Front 16

Income statement interpretations

Back 16

Horizontal Analysis, Vertical Analysis, Comparative income statements, Base-Year comparisons

Front 17

Use of Footnotes in balance sheets

Back 17

-Full Disclosure principal
-Accounting Method changes
-Contingent Liability(lawsuit against co.)
-Unusual Items

Front 18

Purposes of the statement of cash flows

Back 18

-Effects on cash of a business
-Provides relevant info regarding cash receipts and disbursements
-Enables management to make assessments

Front 19

Three activity areas found in cash flow statements

Back 19

Operating activities, Investing activities and financing activities

Front 20

Methods of converting income statement to cash flow statements

Back 20

Direct Method: Cash recipets from sales, Cash disbursement for expenses, expenses involving non-cash items ignored
Indirect Method: Adjust net income for non-cash items, present cash flows by activity

Front 21

Issues pertaining to statement of cash flows

Back 21

1.SCF not analyzed by itself
2.Management focus on operations and resources
3. SCF is relatively new
4. Common-sized SCF may be useless
5. Changes

Front 22

T/F
The largest expense category of the average lodging operation is generally payroll and related expenses

Back 22

T

Front 23

T/F
The cost principal dictates that an expenditure for equipment be recorded as a fixed asset rather than as an expense.

Back 23

False

Front 24

T/F
The Balance sheet reveals the liquidity of a business.

Back 24

True

Front 25

T/F
Revenue accounts normally have credit balances.

Back 25

True

Front 26

T/F
A limited partnership is a form of business organization in which all partners have limited liability for the debts of the business.

Back 26

False

Front 27

T/F
Liabilities to be paid within on year should be classified as current

Back 27

True

Front 28

T/F
In most cases the balance sheet remains up to date for several months after the balance sheet date.

Back 28

False

Front 29

T/F
Current assets are normally listed on the balance sheet in the order of their importance to the business

Back 29

False

Front 30

The principal of full disclosure dictates that footnotes be included in the financial statement presentation of a hospitality business.

Back 30

True

Front 31

A Hotel's paid occupancy percentage is consistent from day to day, fluctuating only in the long term.

Back 31

False

Front 32

T/F
Income statements for external users are often called summary income statements

Back 32

True

Front 33

T/F
A Uniform system of accounts is a standardized accounting system designed specifically for use in multi-unit operations

Back 33

False

Front 34

T/F
A uniform system of accounts can be adopted for use by Large and Small hospitality operations

Back 34

True

Front 35

T/F
An operated department schedule always includes both Revenues and Direct expenses

Back 35

True

Front 36

T/F
The difference between a profits enters Revenues & Centers Revenue and direct expense is referred to as departmental income

Back 36

True

Front 37

T/F
A gain on a sale of property and equipment is determined by subtracting the accumulated depreciation of the item sold from the proceeds.

Back 37

False