chap 6 intro to hospitality

GAAP - generally accepted cccounting principles

standards and procedures adopted by people responsible for preparing business financial statements to ensure uniformity

USALI - uniform system of accounts for the lodging industry

standardized set of accounting procedures to report a hotel’s financial transaction and condition

revenue - expenses = profit

profit formula

Income before fixed charges

IBFC

Earnings before interest, taxes, depreciation and amortization

EBITDA

Accounting

the process of summarizing, reporting, and analyzing financial transactions

CPA - certified public accountants

professional title given to an individual who passes the exam related to accounting and principles

Controller

the individual or department responsible for maintaining the back office accounting systems in the hotel

Front office accounting

summarizing and reporting financial transactions happening at the front desk

Back office accounting

summarizing and documenting financial activity of hotel operations and logistics

Bookkeeping

the process of recording financial transactions in a hotel (simply recording; accounting is additionally analyzing info)

Audit

an independent verification of a financial record performed by a qualified professional

budget

an estimate of inecomes and expenses for an identifying accounting period

capital expenditure

purchase of equpiment, land, buildings, and other fixed assets necessary for hotel operation

fiscal year

a one-year period (365 days) of time used for planning, budgeting

Rack rate

a hotel’s official price for rooms before discounts or promotion

internal controls

a system of rules and policies set out by the hotel to ensure safety of cash and assets

need, opportunity, rationalization

conditions that may motivate employees to steal the money from hotels—they are in difficult financial situations, they are put in conditions to access money, and they think stealing a bit is okay.

cybersecurity

processes and procedures designed to defend computers, servers, electronic systems, etc. from malicious attacks

accounts receivable

unpaid money that corporate clients, group guests, or travel agents owe a hotel, resort, or restaurant for services already delivered on credit

direct bill

payment method and action used to transfer a guest's charges to a company or organization's account (using credit)

City ledger

A collection of related accounts that tracks owned money/charges by individuals or organizations who are not staying on property

AP - accounts payable

costs the hotel owes to external vendors for purchases made by the hotel (unpaid charges)

D-report

recaps hotel’s financial activities for the past 24 hours

no show

guests who paid for the room but did not show up to take it; categorized as “other income”

night auditor

the employee who performs daily review/summary of guest transactions recorded at the front desk

House count

estimated number of guests staying in the hotel on a given day

balance sheet

report detailing assets/liabilities/owner’s equity of business at a specific point in time

assets = liabilities + owner’s equity

balance sheet formula

depreciation and amortization

slowly spreading out the expenses of the things over its lifespan; (physical goods VS. untouchable goods)

income statement

a financial report about hotel revenues and expenses for a specific period of time; about how much money they make

SCF - statement of cash flows

a report detailing the effect on cash holdings of a business operating, investing, and financing activities (focusing ONLY on cash in hand)

Internal audit

a verification of financial records performed by members of the organization operating the hotel

collusion

secret cooperation between two or more employees for the purpose of committing fraud