01. Hotel's Basic Accounting by Dino Leonandri

1. Hotel Basic Accounting #1
By : Dr. Dino Leonandri, SE, MM, CHA

2. BASIC ACCOUNTING PRINCIPLES
ACCRUAL BASIS
This method means revenue or income is recognized when earned
regardless of when received and expenses are recognized when
incurred regardless of when paid.
Hence:
Income does not mean cash collections and
expenses do not mean cash payments
Under accrual basis income and expenses are independent of cash
collections or payments

3. ACCOUNTING ENTITY CONCEPT
Accounting entity concept means a business is an entity, separate from its
owners, managers, and employees.
Personal transactions therefore, should not be mixed in with transactions
of the company.
Ex : 1. If ABC company, buys a vehicle for transportation
of its customers that is a business transaction.
2. If Mr A, the owner of ABC company, buys a car
for personal use with his own money, then that
transaction should not be mixed in with ABC
company transactions.

4. I M E
P E R I O D
T
The time period concepts means that a business has indefinite life
unless otherwise noted and this life is subdivided into periods of
equal length for reporting financial statements.
Accounting period is usually 1 year – More frequent reports are
done monthly or quarterly.

5. MATCHING PRINCIPLE
Income is matched with expenses and vice versa. Expenses are recognized
in the period the income is earned and income is recognized in the period
the expenses are incurred. Through accrual accounting the matching
principle is achieved.
Revenue recognition principle – accrual accounting
Expense recognition principle – accrual accounting
Historical cost principle – items in the balance sheet are generally presented
at historical cost. Some accounts however are revalued at fair market value
or discounted cost (Mark to Market). (usually Land, Properties)

6. ELEMENTS OF ACCOUNTING
3 major elements of Accounting are:

7. The balance sheet

8. The balance sheet
The balance sheet shows the balance between the assets of an
organization with its liabilities and owners’ equity. This balance is
symbolized in the fundamental accounting equation as follows:
Assets = liabilities + owners’ equity
Asset is everything of value that is owned by a person or a company
• Current assets are those assets that are expected to be converted into
cash in a relatively short time or in the normal operating cycle of the
business.
• Non-current receivables : Different from the receivables described under
current assets, noncurrent receivables are those accounts that are not
expected to be collected within the year
• Investments in other companies or in property or plant not connected
with the daily operations of the property are equally considered as a
separate asset category
• Fixed assets also known as property, plant and equipment (PP & E)
refer to those assets and property within a company which cannot easily
be converted into cash.
• Operating equipment As explained above, operating equipment with
periods of consumption of less than one year are classified as current
assets.

9. The balance sheet
A liability is an amount that an individual or a company is under obligation
to pay to other persons or organizations.
• Current liabilities These are obligations at the balance sheet date which
are reasonably expected to be paid back within the next 12 months.
• Accounts payable Accounts payable represents amounts due to
suppliers. Amounts due to other parties for guest charges collected by
the property may be included with Accounts payable or shown
separately.
• Advance deposits Advance deposits represent amounts received that
are to be applied as part of the payment for future sales of rooms, food
and beverage, or other goods and services
• Income taxes payable Income taxes payable represents the estimated
obligations for income taxes to be honoured within the next 12 months.
• Long term liabilities These are obligations, which on the date of the
balance sheet are expected to be paid back beyond the next 12 months.
• Owners’ equity At the start of a business, the owners bring in some
funding into the business to finance the acquisition of their assets.

10. The profit and loss account statement
The profit and loss account statement shows the flow of activities and
transactions between the organization’s top line (revenues) and its bottom
line (net income).

11. The profit and loss account statement
Revenues is that income that a company receives from its normal
business activities.
Cost of sales or cost of goods soldis made up of the direct costs/expenses
attributable to the production of the goods sold by the organization
Other expenses :
• Payroll and related expenses This category includes the salaries and
wages of employees in their respective departments.
• Other departmental expenses This category includes only the direct
departmental expenses
The departmental income or loss will simply represent the net revenue of
each department minus all related cost of sales, payroll and related
expenses, and other expenses
Undistributed operating expenses As not all departments are revenue
generating departments in a company, certain categories of expenses are
generated by departments that are called service departments

12. The profit and loss account statement
Undistributed operating expenses, which are:
1.Administrative and general expenses
2.Information and telecommunications systems
expenses
3.Sales and marketing expenses
4.Property and operations maintenance expenses
5.Utility expenses

13. Adjustments to the balance sheet and
the profit and loss account
1. The accruals convention This is also called the matching convention, it is
very important in the calculation of profit.
2. Stock (inventory) Generally the value of inventory at the end of the year is
equal to the number of items in stock multiplied by the value of these
individual items.
• Opening balance (01/01/2016) € 5,600
• add purchases (all of 2016) € 28,000
• equals available supplies (for the year 2016) € 33,600
• less supplies used (to be determined) unknown
• equals ending balance (31/12/2016) € 4,000
Since it is clear that the available supplies during 2016 was €33,600 and
the year ended with only €4,000, then it means that supplies used in
2016 was €33,600 – €4,000 = €29,600

14. Adjustments to the balance sheet and
the profit and loss account
Accounts receivable result from credit sales accorded by the organization
Depreciation and amortization Based on the matching or accruals
convention, adjustments for the depreciation and amortization of fixed assets
can be made

15. QUIZ
Question :
What are Accounting Principles and explain the types of these principles?
Please answer the questions above and email to:
dinoleonandri@stptrisakti.ac.id
by email no later than 1 week ahead.
In the email subject, write the name of the campus, course and class
example :
1. STPT/Intl Class/Hotel Basic Accounting
2. Poltekpar Plb/DIK 6A/Hospitality Business
3. Poltek Intl Jkt/AJ/Hotel Management

16. THANK YOU
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