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The Accounting Profession What It Is. Accounting is a Profession F Commercial/Financial F Cost F Tax F Auditing F Budgeting F Government

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  • Slide 1
  • The Accounting Profession What It Is
  • Slide 2
  • Accounting is a Profession F Commercial/Financial F Cost F Tax F Auditing F Budgeting F Government
  • Slide 3
  • Users of Financial Information F Owner F Creditor F Manager F Government F Public
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  • Financial Vs Managerial Accounting F Financial Accounting is historical F Managerial Accounting provides information, enhances controls, and plans for events
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  • Managerial Accounting F Management is choosing from alternative courses of action F Managerial Accounting is concerned with serving internal decision makers
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  • Managerial Accounting F Financial Accounting is concerned with serving external decision makers F Managerial Accounting links with Cost Accounting
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  • Managerial Accounting F Provides Financial Statement Analysis and Interpretation F Performs Cost Volume Profit Analysis F Performs Cash Flow Analysis
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  • End Products F Balance Sheet (Ch 2) F Income Statement (Ch 3) F Statement of Cash Flows (Ch 4)
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  • The Hospitality Business An Overview
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  • H o s p i t a l i t y I n d u s t r y R e s t a u r a n t s & F o o d S e r v i c e L o d g i n g T r a v e l & T o u r i s m C o n v e n t i o n s A t t r a c t i o n s S e r v i c e
  • Slide 11
  • The Hospitality Business F Hotels, Motels, Motor Inns F Over 100,000 Hotel Rooms in Orlando - and Growing F Industry Average Occupancy Rate - 70% (Rooms Sold Divided by Rooms Available)
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  • The Hospitality Business F All Types of Food Service F Theme Parks F Transportation Services F Entertainment F Recreational Facilities
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  • The Hospitality Business F Over 80 Mega Hotels (More Than 1,000 Rooms) F 50,000 Hotels in United States F Over 4 Million Guest Rooms
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  • The Hospitality Business F Lodging $100 Billion F Food and Beverage $400 Billion F Lodging and Food and Beverage Equates to 5% of GNP
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  • The Hospitality Business F F Food and Beverage Single Units F F McDonalds - Over 32,000 Units F F Clubs With Memberships From 200 to 15,000
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  • Hotel Revenue F 64.1% Rooms F 19.5% Food F 5.1% Beverage F 7.0% Other Departments F 2.5% Telephone Department F 1.8% Rentals and Other Income
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  • Hotel Costs and Expenses F 44.9% Salaries, Benefits and Meals F 30.0% Operating Expenses F 11.0% Cost of Sales F 5.5% Energy Costs F 8.6% Taxes, Management Fees, Insurance
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  • The Hospitality Business F Seasonal Business F Fluctuating Demand F Short Conversion Time - Food F Selling Space - Now or Never F Labor Intensive F Intensive Fixed Asset Investment
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  • Hospitality Accounting Careers F Chief Financial Officer F Controller or Chief Accountant F Director of Management Information Systems (MIS)
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  • Hospitality Accounting Careers F Budget Director F Food and Beverage Controller F Internal Auditor F Cost Accountant
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  • Key Driver in Hospitality F Paid Occupancy Percentage # rooms sold / # rooms available # rooms sold / # rooms available Assume Hotel has 200 rooms and sells 300 rooms in June 300 / (200 * 30) = 300 / 6,000 = 5.00%
  • Slide 22
  • Forms Of Business Organizations F Sole Proprietorship F Partnership F Limited Partnership F "C" Corporation F "S" Corporation F Limited Liability Company
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  • A Review of Accounting A Quick Summary
  • Slide 24
  • Uniform System of Accounts F Industry Uses a Uniform System of Accounting F Lodging Operations, Restaurants, Clubs
  • Slide 25
  • Generally Accepted Accounting Principles F Provide Uniform Basis For Preparing Financial Statements F AICPA F FASB F GAAP
  • Slide 26
  • Principles of Accounting F Cost Principle F Business Entity F Continuity of the Business Unit F Unit of Measurement
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  • Principles of Accounting F Objective Evidence F Full Disclosure F Consistency F Matching
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  • Principles of Accounting F Conservatism F Materiality F Cash Basis Accounting F Accrual Basis Accounting
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  • Cash vs Accrual F Cash Basis Accounting Recognize revenue or expense when cash received F Accrual Basis Accounting Recognize revenue when earned Recognize expense when incurred
  • Slide 30
  • Fundamental Equation F Assets = Liabilities + Owners Equity F Assets = Liabilities + Permanent OE + Permanent OE + Temporary OE + Temporary OE F Assets = Liabilities + Permanent OE + Permanent OE + Revenue + Revenue - Expenses - Expenses
  • Slide 31
  • Fundamentals of Accounting F Balance Sheet Assets - Things Owned = Liabilities ( Obligations ) + Equity ( Residual Claims on Assets )
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  • Fundamentals of Accounting F Income Statement Revenues - Expenses = Net Income Temporary Accounts are Netted and Closed to Equity (retained earnings)
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  • Debits and Credits F Debits on Left F Credits on Right F Debits Must Equal Credits - Double Entry Bookkeeping
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  • Debits and Credits F Debit does not mean increase or decrease F Credit does not mean increase or decrease
  • Slide 35
  • Normal Balances F Asset - Debit F Liability - Credit F Equity - Credit F Revenue - Credit F Expense - Debit
  • Slide 36
  • Normal Balances F Other Types of Accounts F Contra Assets - Credit Accumulated Depreciation Allowance for Bad Debt F Contra Equity - Debit Withdrawals Treasury Stock
  • Slide 37
  • Debit vs Credit F Assets and Expenses have a normal balance of a Debit To increase the balance Debit To decrease the balance Credit F Liabilities, Permanent OE and Revenues have a normal balance of a Credit To increase the balance Credit To decrease the balance Debit
  • Slide 38
  • Adjusting Entries F Needed to make transition from cash to accrual accounting F Example: Pay $3,600 for a 3 year insurance policy in January 2000 Fiscal year is July - June
  • Slide 39
  • Initial Entry (January 1, 2000)
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  • June 30, 2000 Entry Prepaid Insurance Balance = $3,000
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  • June 30, 2001 Entry Prepaid Insurance Balance = $1,800
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  • June 30, 2002 Entry Prepaid Insurance Balance = $600
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  • December 31, 2002 Entry Prepaid Insurance Balance = $0
  • Slide 44
  • Elements of Ethics F Privacy of Communication F Conflict of Interests F Political Contributions (U.S.) F Company Records F Gifts, Favors, Entertainment, Trips, Outings
  • Slide 45
  • Elements of Ethics F Use of Company Assets F Anti-Trust Laws F Relations With Competitors F Relations With Suppliers F Relations With Customers
  • Slide 46
  • Ethics and Hospitality Accounting F Is the Decision Legal? F Is the Decision Fair? F Does the Decision Hurt Anyone? F Have I Been Honest With Those Affected?
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  • Ethics and Hospitality Accounting F Can I Live With My Decision? F Am I Willing to Publicize My Decision? F What If Everyone Did What I Did?
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