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

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