lesson 1 Flashcards
What is the purpose of accounting in the hospitality industry?
To record financial transactions, summarize them, and accurately report them
Accounting is essential for managing finances in hospitality, including guest purchases, food, beverages, and room bookings.
Who is an accountant?
A person skilled in the recording and reporting of financial transactions
Accountants play a crucial role in ensuring accurate financial reporting.
How is accounting utilized in the hospitality industry?
It is used for every line a guest purchases, including food, beverages, or hotel guest rooms
This allows businesses to track their income and expenses effectively.
What do creditors want to know before lending money to a hospitality business?
The estimated financial performance of the proposed business
This helps them assess the risk of lending.
What do owners of a hospitality facility monitor?
Their business’s financial condition
This is crucial for making informed management decisions.
What do investors look for in businesses?
Opportunities that will conserve or increase their wealth
Investors use financial information to evaluate potential returns.
How do managers use accounting in decision-making?
They use accounting techniques along with their education, experience, values, and goals
This comprehensive approach aids in effective management.
What is revenue in the context of financial transactions?
The money taken in by the business
Revenue is a key indicator of business performance.
What are expenses?
The costs of items required to operate the business
Managing expenses is vital for profitability.
Define profit.
The dollars that remain after all expenses have been paid
Profit is calculated as revenue minus expenses.
What is the formula for calculating profit?
Revenue - Expenses = Profit
This formula helps businesses assess their financial success.
What does financial accounting include?
Accounting for assets, liabilities, and owner’s equity
These components provide a complete picture of a business’s financial health.
What are assets?
Items owned by the business
Assets can include cash, equipment, and property.
Define liabilities.
The amounts the business owes to others
Liabilities represent financial obligations.
What is owner’s equity?
The residual claims owners have on their assets
This is calculated as the amount left over after subtracting liabilities from assets.
