Structure is crucial in accounting because it provides a framework that the work and information revolves around. Although accounting has become increasingly more complex with the introduction of new theories and ideas, the core principles have remained unchanged.
This article looks at five of these basic principles to help you understand them better and find out what impact they have on hotel accounting.
The five major principles for hotel accounting are:
1. The assets
2. Entry and exit events/transactions
3. Processes
4. Types of expenses
5. Types of income
1) The assets: As its name suggests, the assets are those that can be property of the hotel. They include the building and land (property), furniture, fixtures and fittings (equipment), vehicles and plant (goods)
2) Entry and exit events/transactions: They are such events or transactions that occur during the accounting period. Examples include entering into a lease agreement, paying utility bills or buying goods.
3) Processes: These processes are regular steps in business operations that result in decisions or actions to be taken. Examples of processes include assessing the amount of damage after a fire at a hotel, booking inventory for an upcoming season or writing off bad debts.
4) Types of expenses: These are costs that are regularly incurred by an organisation. Examples are wages and salaries, rent, advertising and phone bills.
5) Types of income: These are the income that is generated by an organisation for revenue-generating purposes.
Examples include revenue from selling goods and services, rent from property or revenue from parking spaces in a parking garage.
Useful terms: Assets = Property of hotel; Expenses = Costs of hotel; Income = Revenue
In brief: The main purpose of the hotel accounting system is to provide financial information to help you make decisions and plan accordingly so as to avoid pitfalls like over-expenditure or under-expenditure.
There are various types of accounts that you can use when managing your hotel business. These include the following: hotel financial statements; hotel cash flow statements; and budgeting and forecasting reports.
Accounting is crucial in managing a business successfully because it informs you of where you stand financially, tracks the financial performance of each expense and decision, optimises cash flow and provides a benchmark for future comparisons.
Basic accounting principles –
Hotel’s financial statement: It’s an important tool to help identify the resources (assets), liabilities (expenses) and capital (equity) of a company.
Hotel’s cash flow statement: It is a detailed analysis of income and expenditure.
Budgeting and forecasting: They assist in planning and predicting the performance of a company through estimation and calculation.
In this article, we will discuss the benefits of cloud-based hospitality accounting software, give you an idea of what to look for in a program, and cover the few drawbacks.
Time-saving:
Only use your computer to enter important financial information and never have to do tedious calculations again! Many programs also allow you to generate invoices and print paychecks quickly and easily. This saves you even more time because you won’t be spending any more time calculating payroll deductions or writing checks. Plus, these programs help prevent errors because they only provide you with what you need when you need it, which is something that can’t be stressed enough.
Flexibility:
Once you have your business finances on a computer, you can easily customize the programs to your needs. If you don’t want to print paychecks or pay employees directly with a check you can create an electronic form that will just be accepted as payment for whatever type of service is being provided. You can also set up automatic bank payments, which saves you another step in the process.
Minimal risk:
You will never have to worry about getting incorrect information when using accounting software because it will be programmed with your company’s specific needs in mind. It will save you time, money and hassle while providing clear and accurate reports that are easy to understand.
Cost:
You won’t have to worry about paying for the software or the service. You will only pay for what you use and your computer time, which is an added bonus. Many programs are also available in a free trial version so you can test them out before making a purchase.
Drawbacks:
You will need to know how to program in order to use these software programs. Although it can be fun and do help save you time, the idea of learning something completely new may not appeal to everyone. Also, the programs are geared towards businesses and not home users, so they may not be a good match for casual users who only want an easy way to keep track of their accounts. Some programs are also more complicated than others, so you might require a bit more knowledge of accounting/finance before you decide which one is right for you.
It is important to find a program that meets your specific needs.
What do you need? What are the steps? How much do you want to spend? Does the company’s accounting department use software or do you need/want to create a program yourself? What types of data will be included in the report (such as income and expenses per department, individual’s earnings, etc.
If you’re looking for the best hotel accounting software to manage multiple properties at once without any hassle, try Nimble!
