Unit one

These flashcards cover essential vocabulary and concepts related to financial statements in the hospitality management industry.

Financial Statements

Formal records of the financial activities of an entity that quantify its financial strength, performance, and liquidity.

Income Statement

A statement that shows the ending results of operations for a specific period, detailing sales revenue, cost of sales, and expenses.

Balance Sheet

A financial statement that provides a snapshot of a business's financial condition at a specific time, showing assets, liabilities, and ownership equity.

Uniform System of Accounts

Standardized charts of accounts developed for specific operating segments in the hospitality industry to ensure uniformity and comparability of financial data.

Direct Expenses

Costs that can be directly attributed to a revenue-generating activity or cost center, such as materials and labor.

Indirect Expenses

Costs that cannot be readily assigned to a specific revenue-generating activity, often considered overhead.

Current Assets

Assets expected to be converted into cash or used within one year, including cash, receivables, inventories, and prepaid expenses.

Long-term Liabilities

Debts that are due more than one year after the balance sheet date.

Retained Earnings

The accumulated net income of a company that is retained for reinvestment rather than distributed as dividends.

Net Income

The total profit of a business after all expenses and taxes have been subtracted from total revenue.

Gross Margin

Sales revenue minus cost of sales, reflecting the profit from sales before deducting operating expenses.

Operating Income

Income generated from normal business operations, before deducting taxes and interest expenses.

Contribution Margin

The difference between sales revenue and variable costs, indicating the portion of sales that contributes to covering fixed costs.

Cash Flows

The net amount of cash being transferred into and out of a business, essential for financial management and investment decisions.

Comparability

The objective of accounting systems to provide information that allows for reliable comparisons between the financial results of different entities.