Managerial Accounting for the Hospitality Industry

Lea R. Dopson is Dean and James A. Collins Distinguished Chair of The Collins College of Hospitality Management at Cal Poly Pomona. Previously, she was Department Chair of Hospitality and Tourism Management at the University of North Texas, and she taught at Cal Poly Pomona, the University of Houston, and Texas Tech University. Dr. Dopson holds an Ed.D. from the University of Houston, and an MBA and BS in Restaurant, Hotel, and Institutional Management from Texas Tech University. Her areas of teaching include hos-pitality managerial accounting, hospitality finance, and food and beverage cost controls. She has published in a variety of journals and has presented her research at numerous conferences. She has also co-authored with David Hayes, Food and Beverage Cost Control, published by John Wiley & Sons, which is presently in its sixth edition. Dr. Dopson has an ardent interest in international education, as is demonstrated by her creation of a MS in International Sustainable Tourism joint degree between the University of North Texas and Centro Agronómico Tropical de Investigación y Enseñanza (CATIE), Costa Rica. Also, Dr. Dopson lived 9 months in Zimbabwe, Africa, developing a degree program in interna-tional hospitality and tourism. In addition to her academic career, she has held various unit and corporate hospitality management positions with Texas Tech Foodservice, Sheraton Hotels, and Bristol Hotels.

David K. Hayes earned his Ph.D. in Education from Purdue University, as well as MS and BS degrees in Hotel and Restaurant Management. He held faculty positions at Purdue University, Texas Tech University, and the University of Houston. At Texas Tech University, he founded the Restaurant Hotel and Institutional Management (RHIM) program and served as Chair of the Department of Nutrition, Education and Restaurant/Hotel Management. Dr. Hayes was Vice President of the Educational Institute (E.I.) of the American Hotel & Lodging Association (AH&LA) and was responsible for the develop-ment of industry training programs utilizing advanced technology delivery systems. An industry practitioner as well as academician, he was the Owner/General Manager of the full-service Clarion Hotel and Conference Center in Lansing, Michigan. An accomplished author, his scholarly articles have appeared in The Cornell Quarterly. He has written 12 books, including texts translated into Spanish, Japanese, Chinese, Portuguese, and Croatian. He is now a full-time author who divides his professional writing and industry advising activities between offices in Okemos, Michigan and Gulfport, Mississippi.

ABOUT THE AUTHORS iii

PREFACE ix

1 Hospitality Industry Accounting 1

Unique Aspects of the Hospitality Industry 1

The Purpose of Accounting in the Hospitality Industry 3

Branches of Accounting 5

Why Hospitality Managers Use Managerial Accounting 11

The Uniform System of Accounts 13

Ethics and Hospitality Accounting 15

Apply What You Have Learned 19

Key Terms and Concepts 20

Test Your Skills 20

2 Accounting Fundamentals Review 24

Bookkeeping and Accounting 24

The Accounting Equation 26

Recording Changes to the Accounting Equation 27

Generally Accepted Accounting Principles 37

The Hospitality Business Cycle 48

Apply What You Have Learned 52

Key Terms and Concepts 52

Test Your Skills 53

3 The Income Statement 58

The Purpose of the Income Statement 58

Income Statement Preparation 63

Income Statement Analysis 83

Apply What You Have Learned 104

Key Terms and Concepts 104

Test Your Skills 105

4 The Balance Sheet 113

The Purpose of a Balance Sheet 113

Balance Sheet Formats 119

Components of the Balance Sheet 126

Balance Sheet Analysis 138

Apply What You Have Learned 144

Key Terms and Concepts 145

Test Your Skills 145

5 The Statement of Cash Flows 156

Understanding Cash Flows 157

The Purpose of the Statement of Cash Flows (SCF) 158

Sources and Uses of Funds 160

Creating the Statement of Cash Flows 167

Statement of Cash Flows Analysis 182

Apply What You Have Learned 185

Key Terms and Concepts 186

Test Your Skills 186

6 Ratio Analysis 196

Purpose and Value of Ratios 197

Types of Ratios 200

Comparative Analysis of Ratios 243

Ratio Analysis Limitations 245

Apply What You Have Learned 247

Key Terms and Concepts 247

Test Your Skills 248

7 Food and Beverage Pricing 258

Factors Affecting Menu Pricing 258

Assigning Menu Prices 262

Menu Price Analysis 269

Apply What You Have Learned 287

Key Terms and Concepts 287

Test Your Skills 288

8 Revenue Management for Hotels 294

Establishing Room Rates 294

Revenue Management 307

Non‐Room Revenue 320

Apply What You Have Learned 324

Key Terms and Concepts 324

Test Your Skills 325

9 Managerial Accounting for Costs 334

The Concept of Cost 334

Types of Costs 336

Cost/Volume/Profit Analysis 354

Apply What You Have Learned 362

 Key Terms and Concepts 363

Test Your Skills 363

10 Forecasting in the Hospitality Industry 373

The Importance of Accurate Forecasts 374

Forecast Methodology 376

Utilizing Trend Lines in Forecasting 393

Apply What You Have Learned 396

Key Terms and Concepts 397

Test Your Skills 397

11 Budgeting and Internal Controls 402

Importance of Budgets 403

Types of Budgets 405

Operations Budget Essentials 408

Developing an Operations Budget 409

Monitoring an Operations Budget 417

Cash Budgeting 427

Managing Budgets through Internal Control 434

Apply What You Have Learned 439

Key Terms and Concepts 440

Test Your Skills 440

12 Capital Investment, Leasing, and Taxation 450

Capital Budgeting 451

Capital Investment 454

Financing Alternatives 467

Taxation 475

Apply What You Have Learned 483

Key Terms and Concepts 484

Test Your Skills 484

Index 493

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.