Chapter 1

Introduction to Managerial
Accounting

Overview of the Hospitality

Industry
Hotels

Motels
Inns
Quick-service

restaurants
Fine-dining restaurants
Cafeterias
Resorts
Country clubs
Casinos, etc.
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Features
Seasonality

of business
Short Distribution Chain
and Time Span
Labour-Intensive Industry
Major Investment in Fixed
Assets
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The Accounting Function in the

Hospitality Industry
The
Accounting
Process

Economic
Activities

Actions
(decisions)

Accounting links
decision makers with Accounting
economic activities
Information
and with the results of
their decisions.
Decision
Makers

Reported
Results of
Actions
(decisions)
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The Accounting Function in the

Hospitality Industry

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Principles of Accounting
Business

Entity
Cost Principle
Continuity of the
Business Unit
(Going Concern
Assumption)
Unit of
Measurement
(Stable Dollar
Assumption)

Objective

Evidence
Full (Adequate)
Disclosure
Consistency
Realization
Matching
Conservatism
Materiality
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?
Cash Basis
Accounting

Accrual Basis
Accounting

?
Uniform Systems of
Accounts
1-13

Branches of Accounting

Financial
Cost

Managerial
Tax

Auditing Accounting
systems
1-14

Financial Accounting
Accounting

for revenue &

expenses
Recording, classifying &
summarizing transactions
Prepare and distribute financial
reports
Historical, linked to the past
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Cost Accounting
Recording,

classifying and
reporting current and prospective
costs.
Costs determined by departments,
functions, responsibilities, and
products and services
Helps operations personnel
control operations
1-16

Managerial Accounting
Provides

information to various
management levels to enhance
controls.
Deals with performance reports
(comparisons to budgets).
Uses statistical techniques
Future oriented

1-17

Tax Accounting
Prepares

and fills-in tax forms with

governmental agencies.
Tax planning to minimize tax
payments
Main focus: Income Tax

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Auditing
Review

and evaluation of
documents, records, and control
systems.
Provides recommendations for
strengthening operations internal
controls.
Financial audits may only be
conducted by certified public
accounting firms.
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Accounting systems
The

combination or personnel,
procedures, technology and
records used by an organization to
develop accounting information
(including reservations) and to
communicate this information to
decisions makers.

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The Accounting Cycle

Journalize
transactions.

Post entries to
the ledger
accounts.

Prepare trial
balance.

Prepare after-closing Journalize and

post closing
trial balance.
entries.

Prepare
financial
statements.

Make end-ofyear
adjustments.

Prepare adjusted
trial balance.
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Ethics and Hospitality

Accounting Common

Privacy

of
elements
communication
Conflict of
interests
Political
contributions
Company records
Gifts, favours,
entertainments,
trips & outings

Use

of company
assets
Anti-trust laws
Relations with
competitors
Relations with
suppliers
Relations with
customers
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