3/4 Hotel Accountancy | Solved Papers |2013-2014 4th Semester

OR What is the income statement? Explain the reasons why income statement is prepared?

The summary of all accounts dealing with transactions relating the revenue and expenses is termed as profit account. The account is termed as statement wherein information is accumulated relating to the item giving information regarding expenses and revenue. The income statement is the details of revenue and expenses. The income statement provided to the suppliers, debtors, creditors, bankers, etc is different as compared to the income statement prepared for the management. The income statement provided to the management is much more detailed as compared to the income statement provided to the suppliers, etc. Usually, the income statement provided to management contains last three years revenue and expenses. The gross revenue information details along with per share revenue like EPS and CEPS (Earning Per Share, Cash Earnings Per Share), profit, etc. Is enclosed for the perusal of management and investors.

Reason For Making Income Statement :

1. Debt Servicing Cost: Income statement helps the company to know that whether they are in the position to recover the interest paid on borrowing from the bank, market (both secured and unsecured loans) or not.

2. Return on Investment: It is very important to know whether the reasonable return is being paid to the investors, shareholders both equity and preference or not. The company would also like to maintain different types of reserves like the general reserve, capital reserve, special reserve, etc.

3. Income: To know Income, Company is making from routine, normal day – to – day operations.

4. Success or Failure of Management: Whether Company is making reasonable returns from the capital deployed by them. If the returns are better than the competitors, then the policies of the management are considered as successful.

5. Popular: Whether the goods or/and services offered by the company are popular in the market or not. If the sale is improving or is better than the competitors, then it is considered that the services/goods offered are popular.

6. Price Sensitivity: The impact on the sale by increasing or reducing the price is known from the income statement and this helps management in deciding whether to increase or reduce the rate and by what percentage.

7. Profit Centered or Volume Centered: The price sensitivity helps management in deciding that the policy of the management should be price centered. The high volume of the sale will give a lower percentage of profit as compared to the low volume of the sale will increase if the price of the product is reduced. At times by reducing the price the volume of sale is increased considerably and the management makes more profit even if the percentage profit on the sale is lower.

Q.2. What do you mean by auditing? Write the duties of a Night Auditor in the hotel.

Auditing is a systematic examination of the books and records of a business or other organization in order to ascertain or verify and to report the facts regarding its financial operation and the results thereof. R.B. Bose has defined as ‘audit may be said to be verification of the accuracy and correctness of the books of accounts by an independent person qualified for the job and not in any way connected with the preparation of such accounts. Auditing is the verification of the correctness of accounts and reliability of accounting system, date, and information. An auditing, therefore, includes verification of correctness of the accounts, statements, reports, data, etc. and finally checking these data to see that they adhere to accounting principles, plans, procedures, and objectives.

Duties of Night Auditor in Hotel:

A Night Auditor in a hotel has several duties that they are responsible for. Some of the main duties of a Night Auditor include:

1. Auditing financial transactions: The Night Auditor is responsible for auditing all financial transactions that have occurred during the day. This includes verifying guest accounts, posting room charges, and ensuring that all revenue and expenses are properly recorded.
2. Preparing reports: The Night Auditor prepares reports detailing the financial transactions of the day, including occupancy rates, revenue, and expenses. These reports are used by hotel management to make decisions and plan for the future.
3. Checking guests in and out: If guests arrive or depart during the night, the Night Auditor is responsible for checking them in or out. This includes verifying their identity, collecting payment, and providing them with any necessary information about their stay.
4. Handling guest inquiries and complaints: The Night Auditor is often the only staff member available during the night, so they must be able to handle any guest inquiries or complaints that arise. This may involve addressing issues with room accommodations, resolving billing disputes, or providing directions and recommendations for local attractions.
5. Performing security checks: The Night Auditor is responsible for ensuring the safety and security of the hotel during the night. This may involve performing security checks of the hotel’s public areas and guest rooms, monitoring surveillance cameras, and responding to any security incidents that occur.
6. Performing other administrative duties: The Night Auditor may be responsible for performing other administrative duties, such as filing paperwork, answering phone calls, and responding to emails.

The motive of night auditors is to rectify the error before the guest checks out so that neither he is overcharged nor undercharged. This helps hotel in improving its revenue and the image.

Q.3. How will you control Food & Beverage sales of a restaurant? Explain in detail.

The instruments used for the Food and Beverage Service Control are as follows:

1. Kitchen Order Ticket (K.O.T)
2. Restaurant Check
3. Restaurant Sales Summary Sheet
4. Kitchen Summary Sheet
5. Guest Weekly Bill
6. Visitor’s Tabular Ledger (V.T.L)

1. Kitchen Order Ticket (K.O.T.) The four copies of K.O.T are made. The order is taken by the captain on K.O.T. The original copy of the K.O.T is given to Aboyer(Barker) to place the order. After the food has been picked up by the pick – up waiter, this copy of the K.O.T is kept in the locked K.O.T Box, which is taken by the control department at the end of the day or shift for control purposes. The first carbon copy is given to cashier so that he can make the check. The second carbon copy is given to pick up waiter so that he can pick up the food from the kitchen. The last copy is kept at the sideboard (dummy waiter) for the reference of captain or stewards and this helps in service.

2. Restaurant Check: Restaurant check is either prepared by cashier or waiter but is usually priced and totaled by the cashier. To pick – up the food, the check is shown by pick up the waiter and the check items are ticketed by barker before giving the food. On demand, all the four copies of the check are presented to the guest, either he pays in cash or he signs and puts his name and room number or he settled his bill through credit card or debit card. If he pays in cash than the original copy of the check is returned to him with the stamp of paid and cashier’s signature as a receipt, but in case he signs as a resident or as a credit card holder than original copy is sent to front office and the first carbon copy is given to the guest for his reference.

The second carbon copy is sent to accounts department and the third carbon copy is for control department. In case a restaurant check is lost by the waiter that he is liable to pay Rs.1, 000 as a fine along with the price of the check (The check’s price can be ascertained with the help of K.O.T.). In case a check is lost by the cashier then he is liable to pay the fine instead of the waiter. When a check is issued to the waiter, he is required to sign in the Restaurant’s sales summary sheet and when he returns the check to the cashier he takes the stub duly signed by the cashier as a proof that he has returned the check to the cashier.

The stub has the details like Check No., Table No., Waiter No., and No. Of Pax, K.O.T. No. Along with the price of the check. The waiter is required to keep the stub for three days; the period may differ from hotel to hotel. The lower portion of the check (below the remark ‘please do not sign if you pay cash’) is perforated and can easily be tore and handed over to the waiter as his receipt.

3 . Restaurant Sales Summary Sheet: On this summary, sheet cashier maintains the complete record of restaurant sales. When he issues a check to pick up waiter, he gets his signature and when he (waiter) returns the check to the cashier then the lower perforated portion of the check (stub), along with cashier’s signature and stamp, is returned to the waiter and this is his proof that he has returned the check to the cashier. In case this check is lost than the responsibility is fixed on cashier or waiter and who – so – ever is held responsible, is require d to pay the price of the check and a fine of ₹ 1,000. The restaurant sales summary sheet is prepared in duplicate and a copy each is sent to the accounts department and control department. In case guest settles his bill in cash than the amount received is shown in the cash column and discount allowed is shown in the discount column. In case the guest settles his bill by signing (either as a hotel resident or as a credit card/ debit card holder) than the total amount is shown in the ledger column and in the remarks column the Room Number, Name of the Guest, Credit Card Number / Debit Card Number, and other details are entered. Cashier signs in the Signature column.

4. Kitchen Summary Sheet: The Chef prepares a Kitchen Summary Sheet with the help of K.O.T’s. This is also known as Kitchen Cost Sheet. This summary sheet is prepared in duplicate and a copy each is sent to the Accounts Department and the Control Department.

5. Guest Weekly Bill: For each resident of the hotel a guest weekly bill/ guest bill is prepared. All debit and credit vouchers along with room tariff are posted in this bill and as soon as guest desires to check out this bill is presented to him for settlement. For control purposes, a copy each of this is sent to control department and accounts department. But the original copy, in case f cash payment, is given to the guest as his receipt. In case of guest signs, the bill than original bill copy is sent to the company for collection by accounts department and the bill is transferred to ledger accounts and transferred to Account Department for collection.

6. Visitor’s Tabular Ledger: For all the hotel residents of a day a Visitor’s Tabular Ledger is prepared. It is also known as Day Book. For every day , a new ledger is prepared. On this ledger, the room rent and all the vouchers for all the guests are recorded. The Visitor’s Tabular Ledger gives the total sale of the residents of the hotel (but the cash paid by residents in restaurants is not recorded here). A copy each of this ledger is sent to the control department and accounts department. In case the hotel has the computerized accounting system than the restaurant sales summary sheet, guest weekly bill, kitchen summary sheet, and visitor’s tabular ledger are automatically made and the control department can have their printouts on their computers. In some hotels , a separate K.O.T. is not prepared; the restaurant check is prepared by machine / computer. The monitor of the kitchen shows the order and a K.O.T. in leaf form is not given to Barker. For ordering the food there is no need to show the check because order is only placed through computer if check is prepared .