HRTM 421 (With errorless answers)

Hospitality Financial Challenges correct answers A multifaceted industry; low profitability; fluctuating sales volume (not like a supermarket); labor intensive; capital intensive; reliance on discretionary incomes Accounting is the correct answers Language of business Two parts of accounting correct answers Managerial and Financial Financial accounting correct answers The goal of financial accounting is to produce financial statements that accurately present the financial condition of the company and its operating results over time Managerial accounting correct answers The goal of managerial accounting is to provide more timely operating results related to revenues and expenses to help management maximize the operating performance of the business FASB correct answers Financial Accounting Standards Board SEC correct answers Securities and Exchange Commission FASB and SEC correct answers establish the rules and regulations that govern all accounting and financial reporting GAAP correct answers Generally Accepted Accounting Principles: have to be followed and are enforced because of the 2002 Sarbanes-Oxley Act Cost Principle correct answers All transactions, including the purchase or sale of an asset, must be recorded at its transaction price rather than its market value. In addition, fixed assets, like hotel buildings, must be depreciated over time on the company's records. This prevents managers from inflating the value of an asset on the company's balance sheet and from artificially increasing profits on its income statement as the market value of the asset increases over time Full Disclosure Principle correct answers Requires that all potential events that could impact a company's financial position or operating results be clearly reflected on the company's financial statements or noted within footnotes attached to the financial statements ex: a pending lawsuit Revenue Recognition Principle correct answers States that revenue should be recorded in the month they are earned and not when the contracts are signed. For example: a controller should not recognize $10,000 of room sales for a convention group until the convention actually takes place and the attendees have stayed in the hotel Matching Principle correct answers Requires that all expenses incurred in order to generate a particular revenue are recorded in the period the revenue is earned, even if the expense has not yet been paid. For example: if a business incurs $10,000 in labor costs to generate $30,000 of