75 Cards in this Set
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Account
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a record containing information regarding a particular type of business transaction
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Accounting Cycle
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sequence of principle accounting procedures of a fiscal period; analyzing transactions, journal entry, posting to ledger, trial balance, adjustments, preparation of periodic financial statements etc.
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Accrual-basis Accounting
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Transactions are recorded when they occur.
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Adjusting Entries
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entries required at the end of an accounting period to record internal transactions
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Assets
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resources available for use by the business; that is, anything owned by the business that has monetary value
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balance
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the difference between the total debits and total credits of an account
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Business Entity Principle
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the generally accepted accounting principle that requires that a business maintain its own set of accounts that are separate from other financial interests of its owners.
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Cash Basis Accounting
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reporting of revenues and expenses at the time they are collected or paid
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Conservatism Principle
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requires accounting procedures that recognize expenses as soon as possible, but delay the recognition of revenues until they are ensured
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Consistency Principle
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requires that once an accounting method has been adopted it should be followed from period to period i the future unless a change in accounting methods is warranted and disclosed
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Continuity of the business unit principle
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requires the assumption in preparing the accounting records and reports that the business will continue indefinitely and that liquidation is not in prospect- going concern
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Corporation
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a form of business organization that provides a separate legal entity apart from its owners
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Cost Principle
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requires recording the value of transactions for accounting purposes at the actual transaction price (cost)
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Credit
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decrease in an asset or increase in a liability or capital- entered on the right side of an account; such amounts are said to be credited to the account
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Debit
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increase in an asset or decrease in a liability or capital- entered on the left side of an account; such amounts are said to be debited or charged to the account.
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Dividends
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distributions of earnings to owners of a corporation's stock
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Financial Audit
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an independent, external audit
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Full Disclosure Principle
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requires that financial statements must provide information on all the significant facts that have a bearing on their interpretation. Types of disclosure include the accounting methods used, changes in the accounting methods, contingent liabilities, events occurring subsequent to the fina…
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Fundamental Accounting Equation
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assets=liabilities+owner's equity
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General Journal
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record of all accounting transactions
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General Partner
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A member of a partnership with unlimited liability for the debts of the partnership
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Journals
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accounting records of business transactions
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Ledger
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a group of related accounts that constitute a complete unit
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Liabilities
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Obligations of a business; largely indebtness related to the expenses incurred in the process of generating income
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Limited Liability Company
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Form of business organization that combines the corporate feature of limited liability with the favorable tax treatment of partnerships and sole proprietorships.
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Limited Partner
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a member of a limited partnership having limited liability, limited partners may not actively participate in managing the business.
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Limited Partnership
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form of business organization consisting of a partnership between two or more individuals having at least one general partner and one limited partner in which the latter's liabilities are limited to investments.
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Matching Principle
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requires recording expenses in the same period as the revenues to which they relate
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Materiality Principle
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requires that events be recognized and recorded by accounting procedures if they make a difference as determined by some relative standard of comparison.
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Objective Evidence
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preferred basis of accounting transactions and the resulting accounting records
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Owners Equity
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financial interest of the owners of a business; asset minus liabilities
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Partnership
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a form of business organization involving two or more owners that is not incorporated
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Permanent Accounts
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classification of owner's equity accounts that are not closed at the end of an accounting period
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Posting
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transferring data entered in a journal to the appropriate account
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Sole Proprietorship
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An unincorporated business organized by one person
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Specialized Journal
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journal used to accelerate the recording of specific kinds of accounting transactions
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Temporary Accounts
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classification f owner's equity accounts that are closed out at the end of each fiscal year; for example , all revenue and expense accounts
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Trial Balance
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listing and totaling of all the general ledger accounts on a work sheet
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Unit Of Measurement Principle
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accounting principle that the monetary values stated in financial statements should represent a stable unit of value so that meaningful comparisons of current and past periods are possible
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Account format
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A possible arrangement of a balance sheet that lists the assets accounts on the left side of the page and the liability and owners equity accounts on the right side
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Additional paid-in capital
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payments for capital stock in excess of the stated and/or par value of the capital stock
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Balance Sheet
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statement of the financial position of the hospitality establishment at a given date, giving the account balances for assets, liabilities, and owners equity
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Base-year comparison
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analytical tool that allows a meaningful comparison of financial statements for several periods by using a base period as a starting point and comparing all subsequent periods with the base
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Capital Stock
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Shares of ownership of a corporation
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Common Stock
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capital stock of a corporation that generally allows its holders to have voting rights
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Common- size balance sheets
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balance sheets used in vertical analysis whose information has been reduced to percentages to facilitate comparisons
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Comparative Statements
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the horizontal analysis of financial statements from the current and previous periods in terms of both absolute and relative variances for each line item
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Consolidated Financial Statements
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combined financial statements of a parent corporation and its subsidiary corporations
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Currents Assets
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resources of cash and items that will be converted to cash or used in generating income within a year through normal business operations
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Current Liabilities
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obligations that are due within a year
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Current Ratio
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ratio of total current assets to total current liabilities expressed as a coverage of so mahy times; calculated by dividing current assets by current liabilities
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Fluctuation Explanation
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document providing detail not available on the balance sheet that explains drastic changes in balance sheet items.
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Goodwill
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the excess of a hospitality operation's purchase price over the dollars assigned to its individual assets
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Horizontal analysis
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comparing financial statements for two or more accounting periods in terms of both absolute and relative variances for each line item.
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Liquidity
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the ability of an operation to meet its short-term (current) obligations by maintaining sufficient cash and/or investments easily convertible to cash.
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Long-term Liabilities
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obligations at the balance sheet date that are expected to be paid beyond the next 12 months, r if paid in the next year they will be paid from restricted funds; also called noncurrent liabilities
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Noncurrent receivables
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accounts and notes receivable that are not expected to be collected within one year from the balance sheet date
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Operating Equipment
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operating equipment includes linen, china, glassware, silver, and uniforms
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Owner's Equity
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Financial interest of the owners of a business; assets minus the liabilities
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Preferred Stock
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stock issued by a corporation that provides preferential treatment on dividends, but may not give the stockholder voting rights
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Report Format
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possible arrangement of a balance sheet that lists assets first, followed by liabilities and owner's equity
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Restricted Cash
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cash that has been deposited in separate accounts, often for the purpose of retiring long-term debt
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Retained Earnings
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an account for recording undistributed earning of a coporation
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Treasury Stock
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capital stock of a corporation that the corporation has repurchased for future issuance
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Vertical Analysis
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analyzing individual financial statements by reducing financial information to percentages of a whole
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Working Capital
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current assets minus current liabilities
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Capacity Costs
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fixed charges relating to the physical plant or the capacity to provide goods and services to guests
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Departmental Income Statements
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supplements to the income statement that provide management with detailed financial information for each operating department and service center; aka schedules
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Expenses
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cost incurred in providing the goods and services offered
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Gain
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increase in assets, reduction in liabilities, combination of both resulting from incidental transactions and from all other transactions and events affecting the operation during the period
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Income Statement
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report on the profitability of operations, including revenues earned and expenses incurred in generating the revenues for the period of time covered by the statement
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Loss
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decrease in assets, increase in liabilities, or combination of both resulting from incidental transactions and from other transactions and events affecting the operation during a period
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Responsibility Accounting
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the organization of accounting information that focuses attention on departmental results such as the rooms and foods department
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Revenue
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amount charged to customers in exchange for goods or services
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Uniform System of Accounts
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standardized accounting systems prepared by various segments of the hospitality industry offering detailed information about accounts; classification; formats etc.
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HB 302: EXAM 1 TERMS