Essay Income Statement and Restaurant

Submitted By lory1994
Words: 4396
Pages: 18

Thanks for visiting the accounting department. My title is Controller and I’m responsible for the financial operation of both the Lighthouse and the Hutchinson Hotel. Due to the size of these two properties, the accounting department is fairly large and includes several smaller departments. This structure is relatively common in hotels of 500 rooms or larger. Smaller properties may rely on a corporate accounting department or may handle all of the accounting functions with just one accounting generalist.The main departments you’ll find here are; Accounts Receivable, Accounts Payable, Payroll, and Budget and Finance. I work closely with all department heads in the budgeting process. Accounts Receivable is the area that works with our guests to make sure billing is corre

Each year, every department is asked to create an annual budget. I coordinate that process and work closely with the departments to answer any questions or provide information regarding past years or future projections. Some departments, such as the Front Office and the restaurant, are revenue-generating departments. The revenue that these departments bring in is used to fund all departments of the hotel. Departments such as accounting, security and housekeeping are non–revenue generating but must still create and follow a budget. The revenue-generating departments create both a revenue budget, which reflects anticipated sales, and a costs budget, which reflects anticipated costs such as capital expenses, labor, operating supplies, and more. The non–revenue-generating departments only create a cost or operating budget. Once each department has created its budget, I review all the information to make sure that we have enough revenue to cover all costs. In the event that we do not, I meet with each manager and discuss ways to trim costs or increase sales. We begin working on the annual budget approximately 3 months before the end of our fiscal year. In addition, we complete a monthly budget and revise the annual budget quarterly. As I revise the budgets each month, I compare the actual revenue or expense to the forecast revenue or expense and list the variance, as either a plus or a minus percentage. In a perfect world, revenue is always increasing while costs are decreasing. When that doesn’t happen, the managers meet to discuss how to lower costs without compromising service
Financial statements are used to communicate the financial results of the operation to both internal and external stakeholders. Financial statements can also be used as a measure of management’s ability to control expenses and increase profit.
There are several different documents that are considered financial statements.
These include the income statement, the balance sheet, and the statement of cash flow. Of the three, the income statement, or profit and loss statement, is used most frequently.
The P&L is a detailed summary of the hotel’s profits for a specific time period. Items that are included in this document are room revenue or food and beverage sales, and operating expenses, such as salaries, utilities, entertainment, and marketing.
By using standard categories as defined by the Uniform System of Accounts, it becomes easy to compare time periods for performance variations.
To complete the income statement, all revenue is added together and then all expenses are subtracted from the revenue. The end result is referred to as the net income or bottom line. Ideally, the bottom line will show a profit.
The balance sheet is another important document and is composed of three parts: assets, which include things that are owned by the business; liabilities, which are debts that are owed by the business; and equity, the difference between assets and liabilities.
The statement of cash flows provides additional information about the flow of cash into and out of the business and can be used by the bank or creditors to get a feel for the financial stability of a…