LU7 Flashcards
What are external reports?
summarized financial statements (BALANCE SHEET and INCOME STATEMENT) prepared for stockholders, creditors, banks, and other interested parties.
What are internal reports?
detailed financial statements prepared for executives and managers of the company. Includes confidential information that allows management to make internal operating decisions.
What is an operating department?
a department that generates revenue, also known as revenue center. E.g. Rooms department
What is a support centre?
departments that do not produce revenue
What is responsibility accounting?
When expenses that can be directly controlled by the department manager will be charged to that department.
What is a direct expense?
directly related to a specific department
What are Undistributed Operating Expenses?
expenses that cannot be allocated to a revenue centre
Examples of Undistributed Operating Expenses
- Administrative and
General
- Human Resources
- Information Systems
- Security
- Marketing
- Franchise Fees
- Transportation
- Property Operation and
Maintenance
- Utility CostsWhat are management fees?
Expenses that represent the costs of having an independent management company operate the property; these fees also might be expense allocations from the home office
What are fixed charges/costs?
Costs that incur regardless of volume, even when the hotel is closed. Also known as occupation costs. Include Rent, Property and Other Taxes. The summary operating statement does NOT include other fixed costs such as interest, depreciation & amortization.
What are replacement reserves?
an amount specified for future replacement of assets or capital improvements
What is the purpose of the income statement for internal users?
- To provide management with results of operations
- To facilitate comparison to other hotels’ results of operations
- To have comparative standards
What is the USALI income statement format?
FIRST SECTION: Operated departments—the
revenue-generating departments
SECOND SECTION: undistributed operating
expenses—the support departments and
functions
THIRD SECTION: management fees, fixed
charges, gain or loss on sale of property, income tax
Calculation USALI
Revenues
Direct operating expenses -
—————————————-
Departmental operating income
Overhead Expenses(Undistributed & Fixed) -
——————————————-
Net Income
Income statement: Operated departments:
• Rooms • Food • Beverage • Telecommunications • Garage and Parking • Other operated departments • Rentals and Other Income
