HOTEL REVENUE ACCOUNTING & CONTROL

Business Transaction: The exchange of goods, property or services for cash or a promise to pay Revenue (sales) - E !enses " Inco#e I-Revenue Centers: 1. Categories of revenue centers a) Major revenue centers (i.e. ooms, !ood " #everage) $) Minor revenue centers: Te%ephone &ift shops 'e(sstand )a%et *aundry #ar$ershop or $eauty sa%on ecreation centers +. Revenue centers and financial reports Issue supporting schedu%es or departmenta% income statements for each revenue center. ,eparate food " $everage revenue center into t(o: !ood schedu%e and #everage schedu%e Might use more than one account for !ood and a%so for #everage If the sa%es vo%ume and expense items are not significant, they might $e poo%ed to a sing%e financia% reporting category ca%%ed other operated departments The functions associated (ith some minor revenue centers may $e %eased to a -oncessionaire, and hence appear on hote%.s schedu%e of renta% and other income /. Fundamental revenue concepts ,a%es and the matching princip%e0 1pon deposit receipt, cash sha%% $e de$ited, and unearned revenue, deposits or credit $a%ances sha%% $e credited evenue accounts oom sa%es oom a%%o(ances (-ontra revenue account) !ood sa%es !ood a%%o(ances (-ontra revenue account) #everage sa%es #everage a%%o(ances (-ontra revenue account) 2ther income-- !ood and #everage department Te%ephone sa%es

Te%ephone a%%o(ances (-ontra revenue account) 2ther accounts for income earned $y the hote% (ex: interest income, dividend income, renta% income, concessions income, commissions income, vending machines income (%ess the cost of merchandise so%d), sa%vage income, and foreign exchange income)

'et revenue 3 gross revenue - a%%o(ances &ross profit 3 net revenue - cost of sa%es (merchandise items) &ross profit 3 'et evenue (ex: for room revenue) II-Internal Control $or %oo& an& Bevera'e (ales: 1. &uest -hec4 (a%so ca%%ed ,erver.s -hec4s): This initiates the !ood " #everage order ta4en from the guest, and represents the invoice given to the guest. &uest chec4s shou%d $e pre-num$ered, tinted and have dup%icates. Moreover, it sha%% $e 4ept in %oc4ed storage, in numerica% order. 1sed chec4s, unused chec4s versus void chec4s0 5ost to dinner, the server must price and tota% the guest chec4 (app%ica$%e for manua% systems), un%ess the point-of-sa%e e6uipment can automatica%%y perform the addition. *ater, the cashier receives payment or ma4es the guest sign his7her guest chec4 and deposits everything to the cashier. 8t the end of the shift, the cashier.s cash dra(er and supporting documents are accounted for (i.e. cash, credit card vouchers, food charges, and any misce%%aneous paidouts). *ater, they are reconci%ed against cash register reading using a dai%y cashier.s report #everage sa%es in a %ounge, a $ar9 presents a harder jo$ for interna% contro% ,ome $asic interna% contro% procedures for $everage sa%es are %isted as fo%%o(s: a) e6uire the $artender to ring each sa%e as it is made $) e6uire the $artender to insert each paid chec4 into a %oc4ed $ox c) The cash register dra(er sha%% never remain open even for a sma%% period of time d) ,ervers are not a%%o(ed to first pay the $artender in cash and co%%ect %ater from customers e) #artenders shou%d not $e a%%o(ed to ta4e register readings or reconci%e their o(n cash at the end of their shifts +. &uest charge privi%eges: These very privi%eges are a%%ocated to guests (ho have provided an imprint of a va%id credit card or (ere given a direct $i%%ing privi%ege at registration. In this case, a%% guest charges are recorded as de$its in their respective guest, or master fo%ios. III-Accountin' )ersonnel an& %ront O$$ice %unctions: &uest %edger inc%udes individua% records for each of the hote%.s registered guests or an accumu%ation of guest and master fo%ios. &uest %edger accounting (i.e. front office accounting) inc%udes the accumu%ation of guest charges, credits and payments a%ong (ith outstanding $a%ances.

 &uest %edger versus city %edger0 The accounting department is responsi$%e for: ecording the resu%ts of front office activities Maintaining the city %edger 8ccounting for credit card receiva$%e 5aying vendors :and%ing payro%% 5reparing financia% statements (i.e. conso%idated income statement and $a%ance sheet) #udgeting 2ther accounting functions 1. The night auditor: esponsi$%e for entering a%% room charges, separating room taxes from room revenues and insuring that a%% vouchers have $een accounted for and proper%y posted to each guest fo%io. 5repare the front office room status report and reconci%e it (ith the house4eeper.s report for any room discrepancy )erify !ood " #everage charges made to guests and charged to their rooms (ith the dai%y !ood and #everage sa%es reports. This duty is conducted, a%so, for a%% other revenue centers. &uest fo%io errors ((hether overcharges or undercharges) sha%% $e corrected $y the night auditor using either a correction or an a%%o(ance voucher and posted to a separate a%%o(ance journa%. esponsi$%e for preparing a summary report of the up-to-date amounts o(ned to the hote% in $oth guest %edger and city %edger accounts I)-(o#e Gui&elines $or Cas*iers: 1. The opening machine tota%s for paid and paid-out must $e the same figures that appear on the previous shift.s cash report as the c%osing machine tota%s for paid and paid-out +. 8t the c%ose of the shift, the cashier shou%d su$tota% paid and paid-out for the current shift, and record the c%osing figures in the machine.s tota%s co%umn /. If at any stage, cashier accidenta%%y miss-4eys any transaction, adjustments can $e made to the machine ;. 'et cash received 3 cash paid-in (c%osing) - cash paid-in ($eginning) <. 'et cash paid-out 3 cash paid-out (c%osing) - cash paid-out ($eginning) =. 'et cash sum of cashier.s shift 3 net cash received - net cash paid-out >. The cashier shou%d extract the net cash sum from the cash dra(er, and secure the money in the genera% cashier.s safe deposit $ox unti% deposited in the #an4

?. 8t the end of any shift, the cash dra(er shou%d contain exact%y the same amount as it did (hen the cashier opened his7her shift. @. If any cash overage or shortage occur, the cashier must rechec4 the cash report and search a%% the transaction records for possi$%e miss-4eyed entries )-Cas* Internal Control: The :ote% issues :ouse-$an4s to -ashiers !irst -ontro% 5oint

8t the And of the ,hift, each -ashier must prepare the B-ashier.s eportB

Aach -ashier must deposit the Anve%ope a%ong (ith the -ashier.s eport to the &enera% -ashier.s ,afe Ceposit #ox ,econd -ontro% 5oint

The &enera% -ashier must prepare the Cai%y &enera% -ashier.s eport

The &enera% -ashier must deposit the #an4 8ccounts on a dai%y $asis or on a (ee4%y $asis ( esort :ote%s) Third -ontro% 5oint

The Income 8uditor sha%% prepare the Dourna% Antry of -ash Transactions !ourth -ontro% 5oint

INTERNAL CONTROL %OR %OO+ AN+ BEVERAGE (ALE(

8s in near%y a%% hote% departments, !"# out%ets of a hote% might operate under the fo%%o(ing systems: I-Manua% systems II-,emi- automated systems III-!u%%y automated systems I- ,ANUAL (-(TE,(. In sma%% organiEations (here the manager or the o(ner is avai%a$%e in near%y a%% hote% operations, manua% systems are preferred. !or, there is no need for an investment in computers, though a %ot of human errors, as far as contro% is concerned, might $e o$served. The forms that must $e used in a manua% system are: 1. Ca!tain or&er. This form is a (ritten format of the guest order. This is an interna% contro% document prepared in three copies $y the (aiter7(aitress. 8 copy is sent to 4itchen for food production, a copy to service $ar for the drin4s to $e prepared and the %ast copy to the cashier for opening a guest chec4. 2n the captain order, no monetary information ta4es p%ace. ather, the order of the guest, the ta$%e no., the (aiter IC, and num$er of guest(s) are on%y fi%%ed. -aptain orders he%p as to contro% the re%ation $et(een the (aiter, 4itchen, service $ar and cashier. /0 Guest c*ec1 (%&B c*ec12 3A&is4on3). #y recording !"# item prices on the captain order, the cashier prepares the guest chec4. :ad any cance%%ations or additions from the initia% captain order occurred, the cashier shou%d ma4e the necessary changes. 8s far as payment is concerned, the guest might opt for: a) -harging to his7her room. In this case, the (aiter sha%% insert the room num$er and ta4e the guest signature on the guest chec4, $) -ash, -redit -ard, #an4 -hec4 or persona% chec4. In this case, the (aiter sha%% get the due amount from the guestF $ring the co%%ection to the cashier, (ho sha%% prepare the necessary %ega% document for sa%es a%ong (ith the various interna% contro% vouchers needed. In manua% systems, cash register machine is used for this purpose. To i%%ustrate, the cashier rings up the sa%e on the cash register and gives the guest the cash register $i%%.

8t the end of his7her shift, the cashier shou%d ta4e the GHI report from the cash register, attach it to various guest chec4s opened, the captain orders, and the tota% cash received in that very shift. *ater, it is the responsi$i%ity of the :ote% Manager or 8ccounting Managers to verify the tota% sho(n on the cash register tape against the tota% cash receipts and the tota% deve%oped from the seria%%y num$ered guest chec4s. Jhi%e doing so, the unit prices recorded on the guest chec4s have to $e a%so verified from the price %ist. II- (E,I- AUTO,ATE+ (-(TE,(. In %arger organiEations, maintaining interna% contro% $y o$servation and one to one verifications is not app%ica$%e. In cases (here $usiness o(ners (ant to $enefit from computeriEed systems $ut cannot afford financia%%y to set up a fu%%y automated system, it is $etter to get use of an individua% 5osting Machine for the various !"# out%ets. operations. In such systems, there is no need for the verification of unit prices on the guest chec4s as the computer automatica%%y posts the prices. The other advantage is, as the guest chec4 printed from the posting machine is facing the %ega% re6uirements, there is no need to use cash register machine or to create another %ega% document. 8t the end of each shift, the cashier sha%% count the cash receipts and compare them (ith the tota% generated from guest chec4s. The accounting department does the verification. In semi- computeriEed accounting systems there is no interface (ith the other hote% departmenta% systems. This is one of the $iggest disadvantages of this very system since it invo%ves extra contro% (or4 for other departments and functions. !or examp%e, the 'ight 8uditor must contro% and post a%% the data again to the !ront 2ffice system. This is time consuming and su$ject to numerous posting errors. In practice, this might generate significant %ate charge amounts, and hence might affect serious%y the financia% position of the hote%. III-%ULL- AUTO,ATE+ (-(TE,(. In $ig organiEations, manua% or semi-automated systems cannot $e app%ica$%e $ecause of the huge amount of the num$er of transactions, their contro%, and the %arge amount of money associated to them. In fu%%y automated systems, in order to maintain an ade6uate interna% contro% and information f%o(, the individua% computers must $e e%ectronica%%y connected to each other. The major advantages of the system are: 1. 2n-%ine information is avai%a$%e +. 'o need for re-entering data /. Minimum interna% contro% re6uirement