For non-accountant hospitality managers, accounting and financial management is often perceived as an inaccessible part of the business. Yet having a grasp of accounting basics is a key part of management. Using an easy-to-read style, this book provides a comprehensive overview of the most relevant accounting techniques and information for hospitality managers. It demonstrates how to organise and analyse accounting data to help make informed decisions with confidence.
With its highly practical approach, this new fourth edition:
- Quickly develops the reader’s ability to adeptly use and interpret accounting information to enhance organisational decision-making and control.
- Demonstrates how an appropriate analysis of financial reports can drive your business strategy forward from a well-informed base.
- Presents new accounting problems in the context of a range of countries and currencies throughout.
- Develops mastery of the key accounting concepts through financial decision-making cases that take a hospitality manager’s perspective on a range of issues.
- Includes accounting problems at the end of each chapter to be used to test knowledge and apply understanding to real-life situations.
- Offers extensive web support for instructors and students that includes PowerPoint slides, solutions to end-of-chapter problems, a test bank and additional exercises.
The book is written in an accessible and engaging style and structured logically with useful features throughout to aid students’ learning and understanding. It is a key resource for all future hospitality managers.
Table of Contents
1. Introduction: Hospitality Decision Makers’ Use of Accounting
Key characteristics of the hospitality industry
Accounting and business management
Accounting and Hospitality Decision Makers
Uniform System of Accounts
2. Analysing Transactions and Preparing Year-end Financial Statements
The Balance Sheet and Income Statement
Classifying transactions according to assets, liabilities and owners’ equity
The importance of understanding financial accounting basics
3. Double Entry Accounting
Double entry accounting: some background concepts
Double entry accounting: a worked example
4. Adjusting and Closing Entries
Why do we need closing entries?
Why do we need adjusting entries?
Worked examples highlighting types of adjusting entry
5. Financial Statement Analysis
Ratios using operational measures
6. Internal Control
Internal Control Principles
Internal control procedures and specific hotel activities
Bank reconciliation: an important internal control procedure
Accounting for petty cash
7. Cost Management Issues
Management’s need for cost information
Major cost classification schemes
Qualitative and behavioural factors in management decisions
8. Cost-Volume-Profit Analysis
The assumptions of cost-volume-profit analysis
9. Budgeting and Responsibility Accounting
Issues of cost, revenue, profit and investment centre design
Roles of the budget
Behavioural aspects of budgeting
Technical aspects of budget preparation
10. Flexible Budgeting and Variance Analysis
11. Performance Measurement
Shortcomings of conventional financial performance measures
Key Issues in Performance Measurement System Design
The Balanced Scorecard
12. Cost Information and Pricing
Factors affecting pricing
Traditionally applied pricing methods
13. Working Capital Management
Accounts receivable management
Accounts payable management
Working Capital Management
14. Investment Decision Making
Accounting rate of return
Net Present Value (NPV)
Internal Rate of Return
Integrating the four investment appraisal techniques
15. Other Managerial Finance Issues
What should be the over-riding business objective in financial management?
Trading shares in publicly listed companies
Operating and Financial Leverage
16. Revenue Management
Business characteristics conducive to revenue management application
Gauging a hotel’s need for revenue management
Revenue Management System requirements
Using rate categories and demand forecasts
Length of stay controls
Managing group bookings
Revenue management implementation issues
Words of caution in applying the revenue management philosophy
Solutions to the First Three Problems of Each Chapter
Chris Guilding has more than 30 years’ experience in academia. For 12 years, he was Professor of Hotel Management in the Department of Tourism, Sport and Hotel Management at Griffith University, Australia. His teaching specialism is in management accounting, and he has taught MBA, Masters in Hospitality Management, Professional Golfers Association and Australian Institute of Company Directors courses as well as undergraduate programmes. In addition to Australia, he has taught in Canada, Holland, Hong Kong, New Zealand, Singapore and the United Kingdom.
Kate Mingjie Ji is currently a senior lecturer in finance and revenue management at Oxford Brookes Business School, UK. She started her career as an auditor with PricewaterhouseCoopers. She has taught undergraduate and postgraduate finance and accounting courses at Macau University of Science and Technology and also the School of Hotel and Tourism Management at Hong Kong Polytechnic University. She is highly regarded by her students for her passionate approach to teaching.