Accounting Procedure In Hotels
(Case Study Of Zodiac Hotels Limited Enugu, Nigeria)
In hotels, accounting procedures play a crucial role in ensuring the financial integrity and success of the business. The accounting process involves systematically recording, summarizing, and analyzing financial transactions related to hotel operations. This includes tracking revenue from room bookings, food and beverage sales, and other services, as well as managing expenses such as payroll, utilities, and supplies. Accurate and timely financial statements, including income statements and balance sheets, provide hotel management with essential insights into the business’s financial health, allowing them to make informed decisions, monitor performance, and plan for future growth. Additionally, adherence to accounting standards and internal controls helps maintain transparency, accountability, and compliance with regulatory requirements in the highly competitive and dynamic hospitality industry.
Title page
Approval
Acknowledgement
Dedicated
Table of contents
Proposal
CHAPTER ONE
1.0 Introduction
1.1 Statement of the problem
1.2 Purpose of the study
1.3 Significance of the study
1.4 Scope and limitation
1.5 Research question
1.6 Definition of term
CHAPTER TWO
2.0 Literature review
2.1 The accounting concepts
2.1.1 Business entity concepts
2.1.2 The money measurement concept
2.1.3 Dual aspect concept
2.1.4 The going concern concept
2.1.5 Historical cost concept
2.1.6 The realization concept
2.1.7 The accrual concept
2.1.8 The matching concept
2.2 Accounting conventions
2.2.1 Prudence/conservatism convention
2.2.2 Consisting convention
2.2.3 Materiality convention
2.3 Organization of accounts
2.4 Accounting practice/procedure
2.4.1 Preamble
2.4.2 Cash management
2.4.3 Cash receipts and payment
2.4.4 Purchase of Goods and services
2.4.5 Store keeping and stock control
2.4.6 Sales income
2.4.7 Preparation and payment of salaries and wages
2.4.8 Financial reports and statements
2.5 Chart of accounts
2.5.1 Journals books
2.5.2 The general ledger
CHAPTER THREE
3.0 Research methodology
3.1 Population and sample size
3.2 Source of data
3.3 Nature of data analysis
CHAPTER FOUR
4.0 Data presentation and analysis
4.1 Preamble
4.2 Hypothesis testing
CHAPTER FIVE
5.0 Summary of findings
5.1 Recommendations
5.2 Conclusion
Appendix i
Appendix ii
Bibliography
1.0 INTRODUCTION
The practice of accounting came into existence many years ago though, there was no acceptable definite record as to when accounting developed. It should be noted that with the advent of colonial rule in Africa, the European system of accounting was introduced in most of the African countries such as Nigeria. Then, different kinds of people were employed to take care of farms and properties of the Whitman and after that, they have to account for their success so far to their masters because there is a saying that “for every responsibility, there is a saying that “for every responsible, there is always an accountability”.
So if the origin of accounting system is to be trace, if should start from the time people started giving accounts they used in those days cannot be or is not the same as the method we use in this our modern days but can be seen as a base for the modern days account system.
Many definitions have been put forward by various authors of the subject and all seems to have the same meaning. One of such definitions is that by the American Accounting Association which defined Accounting as “a process of identifying, measuring and communicating economic information to permit informed judgements and decisions by the users of such.
However, the definition could be extended by seeing accounting as “the art of recording, classifying and summarizing, analysing, interpreting and reporting on the financial transactions and position of an organization to interested persons”. From the definition, it can be observed that all accounting activities involve the use of documentation.
Companies, organizations, institutions and other establishments require the services of accounting information to understand what is going on n the numerous branches, to educate the effectiveness of companies policies on operation and impact of government’s fiscal and monetary instruments.
Accounting information also helps potential investors to put their investments into optimal uses by providing adequate feasibility reports to guide would be investors.
Now, let us look at the need for accounting information in an organization like Hotels, you will find out that it helps in revealing the amount of profit or loss made and it also deterines the true financial position of the hotel.
Accounting information also helps in dealing on the type of labour to be acquired and the amount to be paid to labourers as their salaries and wages. It also helps in providing a guide to future policy. This then leads to the necessity for accounting as underlined by the existence of an accounting department in any organization.
1.1 STATEMENT OF THE PROBLEM
Major problem
This research study entitled “Accounting procedures in Hotels will try to look into the nature, process, system by which various hotels in Enugu state operate will use of accounting systems and techniques taking a case study of ZODIAC HOTELS LIMITED ENUG.
Sub problem
As we all know that accounting is a living, practical course, there is need to know the present practices of the profession in such areas, among other as.
1. Working capital management
2. Preparation and payment of salaries and wages
3. Books of accounts
4. Sales income
5. Financial report and statements
6. Assets
1.2 PURPOSE OF THE STUDY
I have particularly involved myself in the operation of a hotel. Sit is known that the researcher’s particular interest in hotel administration can not be over emphasized.
The purpose or objective of this of this research work is as follows.
i. To examine the forms they (Zodiac Hotels Limit Enugu) take in presenting their transactions with other parties.
ii. To determine the accounting system by which the hotel operates in terms of the “accounting concepts and conventions.
1.3 SIGNIFICANCE OF THE STUDY
I promised that at the completion of this projects, it will helps others who have not been opportuned which the hotels use.
For the future researchers, the work will be useful and helpful to them because they can make reference to it as they carry out their own work. It is worthy of note that presently; the researchers work load is lessened because of the guidelines on this topic that was made available for him.
1.4 SCOPE AND LIMITATION OF THE STUDY
Due to time constraint and finance, the researcher has decided to confine himself to the accounting procedures in zodiac Hotels limited, Enugu. If not because of the above reasons, I wailed have liked to make comparison of many hotels.
1.5 RESEARCH QUESTIONS
Ho: The accounting procedure in most hotels is inadequate
HA: The accounting procedure in most hotels is adequate
Ho: The accounting procedure used by Hotels does not affect the financial statement of the hotels
HA: The accounting procedure used by hotels affects the financial statement of the hotels.
1.6 DEFINITION OF TERMS
Accounting
The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least, of a financial character, and interpreting the results there to
Liability
Debt which is owned by a company for goods and services supplied to her which are not liquidated at the time of preparing the balance sheet.
Asset
Anything which is acquired by a business entity either for a long-term use within the company for the generation of income or for short term/run used for the purpose of conversion into cash within a year.
Profit
The excess of the selling price over all cost and expenses incurred in marketing the sale
Financial statement
A summary of figure, facts showing the financial condition of a business.
Accounting Procedure In Hotels:
Accounting procedures in hotels are crucial for managing financial transactions and ensuring the financial health of the business. Here is an overview of the typical accounting procedures followed in hotels:
- Bookkeeping: This is the foundation of hotel accounting. It involves recording all financial transactions, including revenues and expenses, in a systematic and organized manner. Transactions may include room charges, restaurant sales, vendor invoices, payroll, and more.
- Chart of Accounts: Hotels typically maintain a chart of accounts, which is a list of all accounts used for recording financial transactions. This includes categories like revenue accounts (room revenue, food and beverage revenue), expense accounts (salaries, utilities, supplies), and asset accounts (cash, accounts receivable).
- Daily Revenue Reporting: Hotels often generate a daily revenue report that summarizes all income generated by various departments, such as rooms, restaurants, and bars. This report is crucial for tracking daily performance and identifying any discrepancies.
- Guest Folio: Each guest’s financial transactions are recorded in a guest folio, which includes charges for the room, food, beverages, and other services. At check-out, the guest folio is used to generate the final bill.
- Point of Sale (POS) System: Hotels use POS systems in restaurants, bars, and other outlets to record sales instantly. These systems help streamline revenue collection and reduce the risk of errors.
- Accounts Payable: Hotels receive invoices from suppliers for various goods and services. The accounts payable department processes these invoices, verifies their accuracy, and ensures timely payments.
- Payroll: Managing payroll is crucial in the hotel industry due to the large workforce. Payroll accounting involves calculating and distributing employee salaries, taxes, and benefits accurately.
- Budgeting and Forecasting: Hotels typically create annual budgets and forecasts to plan their financial activities. These documents serve as a roadmap for managing expenses and maximizing revenue.
- Internal Controls: Implementing internal controls is essential to prevent fraud and errors. Segregation of duties, authorization procedures, and regular reconciliations are part of these controls.
- Audit: Regular internal and external audits are conducted to ensure compliance with accounting standards and to identify any irregularities or discrepancies.
- Financial Statements: Hotels prepare financial statements, including the income statement (profit and loss statement), balance sheet, and cash flow statement. These statements provide an overview of the hotel’s financial performance.
- Tax Compliance: Hotels must comply with tax regulations at the local, state, and federal levels. This includes collecting and remitting sales taxes and income taxes.
- Cash Management: Effective cash management is crucial in the hotel industry. This involves monitoring cash flow, managing cash reserves, and ensuring there is enough liquidity to cover expenses.
- Depreciation and Amortization: Hotels own significant assets such as buildings and furniture. Depreciation and amortization accounting is essential to account for the gradual wear and tear of these assets over time.
- Technology and Software: Many hotels use specialized accounting software to streamline their financial processes and generate reports efficiently.
- Training and Compliance: Staff involved in accounting and financial management should receive proper training on accounting procedures and compliance with financial regulations.
- Risk Management: Identifying and managing financial risks, such as currency exchange risk or interest rate risk, is essential for hotels with international operations.
These accounting procedures ensure that hotels maintain accurate financial records, make informed decisions, and operate within legal and regulatory frameworks. Additionally, a well-maintained accounting system can provide valuable insights into the hotel’s financial performance and help identify areas for improvement.