As in all kind of business the financial accounting has an important role and in hospitality organizations. The financial accounting is measuring the organizations economic performance that it has at the duration of a specific period and the present situation in the end of that period. With the significance of performance we mean the total picture of the organization. It encompasses the entire system of monitoring and controls the revenue and the expenses the assets and the liabilities of the hospitality organization. Is it profitable? Does the total sales and the income of the organization exceeding her expenses? Concerning the previous year, does the total income was increased or decreased? By using financial accounts the organization presents a historic perspective on the financial performance of the business.
2) What is the role of Management Accounting in a Hospitality Organization?
<< Management accounts are used to help management record, plan and control the activities of a business and to assist in the decision-making process>>. During the preparation of the management accounts is provided statistic or financing information that required by the hospitality organizations managers to make decisions. The management accounting generates monthly or weekly reports for the organizations internal audiences such as department managers. The managers with these reports are informed about the amount of available cash, sales revenue and other statistics like the number of employees, the productivity etc. for example the general manager of a hotel, take a weekly report from the maitre of the restaurant with the employees that he use during the service and the revenue at the end of the day. So the general manager can control if maitre is using the correct number of employees depending on the revenue. If the revenue is decreased the number of the employees that working in a shift must also decreased. If maitre doesn't follow the rules of the productivity then the manager can take the decision to fire him.
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3) What are the major differences between Financial Accounting and Management Accounting?
The Financial Accounts are aimed the external users of accounting information, for example to give information's to the state so they know what taxes you must pay. The management Accounts are aimed more the internal users, for example the managers or the supervisors of an organization. The role of the financial and management accounting is one more difference. The Financial accounts describe the performance of a business over a specific period and the status of affairs at the end of that period. In the other hand the role of the Management accounts is to help management record, plan and control the activities of a business and to assist in the decision-making process. For example the manager of the hotel can ask the f & b to send him a report with the revenue of the sales of the last week. If the numbers don't satisfy him, he can take the decision to promote more the f & b departments.
Another difference between these two accounts is in the period that must be prepared. In the financial accounting the specific period is often referred to as the "Trading Period" and is usually one year long. And in the most cases is the first day of the year until the last day of that year. The last day of that period is known as "Balance Sheet Date". In the other hand the management accounts can be prepared for any period. These accounts can be prepared for example every day, or in a weekly basis. One more difference between financing and management accountings is that in the first case are required by law to prepare and publish financial accounts.Â In the second is not a legal requirement to prepare accounts. In the financial accounting depends on the size of the business, the size of the accounts. That means that big business will have more detailed accounts. In the management accounting the accounts can be as detailed or brief as management wish.
The form of published financial accountings is determined from various otherwise, regulating elements: The corporate right, accountant models, administrative assessments. The management accountings can focus in the particular sectors of operational activities. For example, they can provide the ideas in the output: for example Products, separate operational places, departments.
Always on Time
Marked to Standard
Continuing with differences the financial accounts concentrate on the business as a whole rather than analysing the component parts of the business.Â For example, expenses and revenue are aggregated to provide a figure for total loss or total revenue. The Management accounts concentrate on the non-financial information.Â For example, management accounts concentrate on the analysis of the volume of the sales. What units have been sold in which price?
Generally the financial accounts present a historic perspective on the financial performance of the business and the Management accounts largely focus on analysing historical performance.
4) The General Manager of Corfu Palace Hotel has requested that the accounts department followed documents:
Accounts for the last accounting period to comply with the companies act and to distribute to shareholders.
It is a financial accounting and that's because are accounts describing the performance of a business over a specific period and more specific the last accounting period and it concerns external use like shareholders.
A cash flow forecast for the next six months
It is a management accounting. It is a forecast for internal use and will be recorded every day for six months. It is forecast to control the activities of a business.
A report with information for the Food and Beverage Manager to plan his purchases for the next six months.
It is management accounting. It is a report with non financial information's and also is for internal use. This report will help the management to plan the activities of the business. Specifically to this example help the f & b to plan the purchases for the next six months.
An Income Statement describing the trading performance of the business over the last accounting period.
It is a financial account. It is an income statement that describes the performance of the business (total revenue and the total expenses) of the last accounting period.
A report on the budgetary control process to see if the budget matched the actual results.
It is a management accounting. It is an accounting for internal use that will help the management to control the budget and take a decision if it doesn't matched the actual results.
f) A report of the number of employees, their cost and productivity.
It is a management accounting. The Management accounts concentrate on the non-financial information like the employees, their cost and productivity. It is not a legal requirement to report these kinds of information. It is a part of the management decision making process.
A balance sheet which is a statement of assets and liabilities at the end of the accounting period of the business.
It is a financial accounting. It is aimed the external users of accounting information. It is a statement that describes the performance of a business at the end of that accounting period. It is also required by the law.