HOTEL BALANCE SHEETS

Assets = Liabilities + Equity

What is a Balance Sheet?

 The purpose of the balance sheet is to provide a picture of the financial condition
of the business entity at a particular time.
 Assets represent things owned by the property, liabilities are claims to the assets
by outsiders, and equity items are claims by the owner or owners to the assets.
 The balance sheet by category, should reflect each individual account by names
and its numerical balance at the end of a specific date in the operating period.
 The balance sheet can be arranged in either an account format or a report format.
I-Assets:
 They are:
 Something that the Company Owns
 Something that the Company purchased
 Something, which would give a Future Benefit to the Company
 Assets include:
 Current Assets
 Non-Current Assets
1. Current Assets:
 Include Cash and Other Assets that can be converted to cash or provides benefit
within 12 months of the balance sheet date.
a) Cash
Includes Cash in:
 House-banks :
House Bank is cash used for Cash operation, for example for money changer and
refund. House bank at the beginning of the shift should be the same as the end of
the shift.
 Demand Deposits
A demand deposit consists of funds held in an account from which deposited
funds can be withdrawn at any time from the depository institution, such as a
checking or savings account
 Temporary Cash Investments

b) Marketable securities
 Includes Short-term Investments that intendedto be converted to cash or cash
equivalents within a year. Its trading securities and should be reflected at market
value with the unrealized gain or loss.
 c) Receivable
1. Account Receivable
Includes:
 Guest Ledger : Set of accounts used to record charges to and payments
from a hotel registered guests
 City Ledger : set of accounts used to record charges to and payments
from a hotel's non registered guests
2. Notes Receivable
3. Current Maturities of Non Current Receivable
 Represents accounts and notes receivables that expected to be collected during
the next 1 year
4. Other
 Other receivable include those receivable that are not either Accounts or Note
Receivable.
d) Allowance For Doubtful Accounts
 An allowance for the portion of current accounts and notes receivable estimated to
be uncollectible. The allowance should be based on historical experience.
Account that become uncollectible should be charge to this account.
e) Inventories
 Includes the cost of merchandise held for sale, such as food, beverages, and gift
merchandise, also include the cost of reserve stocks of china, glassware, silver,
linen and uniforms and of other items such as guest room supplies.
f) Prepaid Expense
 Represent Payments for items that will benefit future operating period. The
amounts are charged to operations based upon when the benefits are received
g) Deferred Income Taxes – Current
 Represents the tax effects of temporary differences between the bases of current
assets and current liabilities for financial and income tax reporting purpose
h) Other
 Includes item not shown elsewhere that are reasonably expected to be realized in
cash or otherwise in the next 12 months.

2. Non Current Receivable

 Represent accounts and notes that are not expected to be collected during the next
12 month
3. Investment
4. Property and Equipment
Include :
a. Land
b. Leaseholds and Leasehold Improvements
  It is reasonably common for land or the building to be leased. Where a long
term lease is paid in advance, the unexpired portion of this cost should be
shown as an asset. Similarly, if improvements are made to a leased building,
these leasehold improvements are of benefit during the life of the business or
the remaining life of the lease, whichever is shorter. The costs should be spread
(amortized) over this life.
c. Furnishings and Equipment
d. Buildings
e. Constructions and Progress
f. China, Glassware, Silver, Linen, and Uniforms
5. Other Assets
Include :
a. Goodwill
 Goodwill arises in financial statements when a company is purchased for more
than the book value of the company.
b. Cash Surrender Value For Life Insurance
 It refers to the amount an insurance company will offer an insurance owner
who chooses to give back their life insurance policy. Normally, this occurs
when a policy is unwanted or obsolete in the life of a policy holder.
c. Deferred Charges
 A long-term prepaid expense that is treated as an asset on a balance sheet and
is carried forward until it is actually used. Deferred charges often stem from a
business making a payment for a good or service that it has not yet received,
such prepaying insurance premiums or rent
d. Deferred Income Taxes-Noncurrent
 Represent the tax effects of temporary differences between the bases of
noncurrent Assets and Noncurrent Liabilities for financial and income tax
reporting purposes
e. Other
 Noncurrent items that cannot included under specific groupings such as
Security Deposits, Initial Franchise Costs, and other intangible assets.

II. LIABILITIES AND OWNERS’ EQUITY

a. Current Liabilities
1. Notes Payable
Short Term notes that are payable within the next 12 months
2. Account Payable
3. Accrued Expenses
Represent expenses incurred but not payable until after the Balance Sheet Date
4. Advance Deposits
 Represent amounts received that are to be applied as part of the payment for
future sales of rooms and banquets
5. Income Taxes Payable
Represents the estimated obligations for income taxes
6. Deferred Income Taxes-Current
The tax effects of temporary differences between the base of current assets and
current liabilities for financial and income tax reporting purpose.
7. Current Maturities of Long Term Debt
Include the Principal payments of mortgage notes, other notes and similar
liabilities and the installment on capital leases due within the next 12 months.
8. Other
b. Long Term Debt
1. Mortgage Notes
 As a part of a mortgage agreement this type of promissory note states the loan's
amount and duration, the applicable interest rate, and makes the signatory
personally liable for full loan repayment according to the agreement's terms.
2. Obligations Under Capital Leases
 Disclosure should be made of the future minimum lease payments for each of
the five years subsequent to the Balance Sheet Date and the total future lease
obligation, with deduction for the imputed interest necessary to reduce net
minimum lease payments to present value.
c. Other Long Term Liabilities
d. Deferred Income Taxes-Noncurrent
 Represents the tax effects of temporary differences between the bases of noncurrent
liabilities for financial and income tax reporting purpose.
e. Commitments and Contingencies
 Indicated on Balance Sheet only to bring the reader attention to such items.

III. Owners’ Equity

Its presented differently for corporation, partnership and proprietorships, depending upon
the type of equity ownership
a. Corporation
Stockholders’ Equity
1. Capital Stock
Denotes the shares of ownerships of a corporation that have been authorized by its
articles of incorporation.
2. Additional Paid In Capital
Include cash, property, and other capital contributed to a corporation by its
shareholders in excess of the stated or par value of the capital stock
 3. Retained Earnings
The accumulated Net Income not distributed as dividend but retained in the
business
4. Treasury Stock
Represents the cost of company’s stock acquired by the company and not retired,
and should be reflected as a reduction in total stockholders equity

b. Partnership
Partners’ Equity
 Represent the net equity of the partners in the partnership and should be classified
where appropriate as general and limited partners’ equity
1. Contributions
The amount of any additional assets that are invested at the business by the
partners during the period just ended
2. Withdrawals
The amount of any assets that are taken out of the business and distributed to the
partner during the period just ended.

c. Owners’ Equity
 Same with equity for partnership except that it represents the interest of one
individual as opposed to a number of partners.
1. Contributions
The amount of any additional assets that are invested at the business by the
partners during the period just ended
2. Withdrawals
The amount of any assets that are taken out of the business and distributed to the
partner during the period just ended.
 HOTEL CASH FLOW STATEMENT
I. Cash Flow Operating Activities
1. Other Receipts
Includes proceeds from transactions other than guests
2. Payroll Disbursement
Includes salary and wage payments as well as related payments for employee
benefits
3. Other Operating Disbursement
Includes payments for food and beverage, other merchandise and supplies, energy,
rent, taxes other than income, and other expenditures incurred by operations
5. Interest Paid
Includes cash payments to lenders and other creditors for interest
6. Income Taxes Paid
Includes all payments for taxes based on income. It does not include amounts paid o
sales or occupancy taxes
7. Franchise and Management Fees Paid
Include base as well as variable elements paid under franchise and management
contracts.

II. Cash Flow from Investing Activities

1. Capital expenditures
Represents payments to purchase property, buildings, equipment, and other
productive assets. These payments include interest payments capitalized as part of
the cost of those assets.
2. Decrease ( Increase ) in Restricted Cash
The change in the noncurrent restricted cash is included in this item. The change
represents the difference between the additional cash set aside or restricted and the
use of those funds for the restricted purpose
3. Proceeds from asset Dispositions
Its reduced by selling cost payments, are included in this item. This item should not
include any amount of the sales consideration that has been financed by the seller
4. Proceeds from sales of investments
After deduction of selling expenses, should be include in this item
5. Purchases of Investment
The purchase price paid for investments, including the transaction costs paid, should
be included in this item
III. Cash Flows from Financing Activities
1. Proceeds from Debt or Equity Financing
The net proceeds after deduction of transaction costs should be included in this item.
Separate captions should be shown if amounts are significant. This item includes
long and short term financing
2. Debt Repayments
Aggregate principle payments on indebtedness should be included in this item
3. Dividends and Distributions Paid
The amount of Dividends Paid to owners should be included. Other distributions to
owners should be included, with appropriate modification of the caption, if the entity
is not a corporation.