lesson 6 Flashcards
What does Rol measure?
The quality or strength of an investment
Rol stands for Return on Investment.
What is the formula for calculating Rol?
Rol = Money earned on funds invested / Funds invested
Who is responsible for the preparation of the income statement in very small operations?
The owner or managers
In larger operations, who prepares the income statement?
A centralized accounting office
What is the purpose of an income statement?
To identify revenues, expenses, and profits for a defined period
What is depreciation?
A method of allocating the cost of a fixed asset over its useful life
How does depreciation affect taxes?
It lowers income, thus lowering taxes
What is the accounting period usually aligned with?
The calendar months of the year
What is a unique feature of some businesses regarding income statements?
They may create income statements that are 28 days long
What is the matching principle in accrual accounting?
Revenues are reported when earned and expenses when incurred
What does the consistency principle of accounting require?
Uniform treatment of expenses in similar situations
What are the primary components that managers analyze in income statements?
Revenues, expenses, and profits
Fill in the blank: The first part of the hotel’s income statement includes _______.
[revenue data]
List some categories of hotel revenues.
- Rooms
- Food
- Beverages
- Telecommunications
- Garage & Parking
- Golf Course
- Guest Laundry
- Health Center
- Swimming Pool
- Tennis
- Rentals
True or False: Businesses can create income statements on a weekly basis.
True
