Hospitality Financial Accounting Chapter One – Flashcards
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Accounting
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an information system that identifies, records, and communicates the economic events of an organization to interested users
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Identifying
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The first part of accounting, involves selecting those events that are considered evidence of economic activity relevant to a particular business organization
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Recording
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is the keeping of a chronological diary of events, measured in dollars and cents
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Communicating
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The third part of accounting, occurs through the preparation and distribution of accounting reports, the most common of which are financial statements
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Internal Users
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include investors, creditors, taxing authorities, regulatory agencies, customers, labor unions, and economic planners outside the business
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Bookkeeping
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Bookkeeping involves only the recording of economic events, while accounting also includes identification, recording, and communication. Bookkeeping is therefore only a part of accounting
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Financial Accounting
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the field of accounting that provides economic and financial information for investors, creditors, and other external users
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Managerial Accounting
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provides economic and financial information for managers and other internal users
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Generally accepted Accounting Principles
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common set of guidelines (standards) used by accountants in reporting economic events
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Securities and Exchange commission
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an independent regulatory agency of the United States government. The SEC has the legal power to enforce the form and content of financial statements of corporations that wish to sell securities to the public
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Financial Accounting Standards Board
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establishes broad reporting standards of general applicability as well as specific accounting rules
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Monetary Unit Assumption
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requires that only transaction data that can be expressed in terms of money be included in the accounting records
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Economic Entity Assumption
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requires that the activities of the entity be kept separate and distinct from (1) the activities of its owner and (2) all other economic entities
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Proprietorship
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Business owned by one person
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Accounting Equation
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Assets=Liabilities+Stockholder's Equity
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Asset
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Resources owned by a business
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Liabilities
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Claims against assets
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Stockholder's Equity
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Claims of owners
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Paid in capital
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stocker holder's investment in a business
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Retained Earrings
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determined by revenues, expenses, and dividends
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Dividends
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Earnings distributed to stockholders
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Net Income
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revenue > expenses
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Net Loss
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revenue < expenses
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Accounting Cycle
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analysis, journalizing, posting, trial balance, adjustments, adjusted trial balance, financial statements, closing entries, and post closing trial balance
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Three Accounting Systems
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The Uniform System of Accounts for the Lodging Industry, The Uniform System of Accounts for Restaurants, and the Uniform System of Financial Reporting for Clubs
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External Users
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investors and creditors
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Public Accounting
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provides the services of auditing, taxation, and management consulting
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Auditing
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involves examining financial statements of companies and expressing an opinion as to the fairness of their presentation
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Taxation
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includes providing tax advice and planning, preparing tax returns, and representing clients before governmental agencies
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Management Consulting
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involves providing advice for managers on such matters as financial planning and control and the development of computer systems
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Private Accounting
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performs a wide variety of duties such as general accounting, cost accounting, budgeting, accounting information systems, tax accounting, and internal auditing
