Question 1

According to the generally accepted accounting principles (GAAP), the full disclosure principle of accounting is ___________.

Accepted Answer

The full disclosure principle requires that financial statements provide all information necessary for understanding the financial statements. This principle ensures that all relevant information is included in the financial statements and is available to current and potential stakeholders for making informed decisions.

Question 2

The generally accepted accounting principle that supports recording the value of a property at the purchase price when the market value is higher is the___________.

Accepted Answer

The cost principle states that assets and liabilities should be recorded at their original cost, regardless of their current market value or fluctuation. This ensures consistency and objectivity in financial reporting.

Question 3

The generally accepted accounting principle that indicates that accounting and financial statements are based on the concept that each business maintains its own set of accounts and that these accounts are separate from those of the owners is the ______________.

Accepted Answer

The business entity principle is the generally accepted accounting principle that indicates that accounting and financial statements are based on the concept that each business maintains its own set of accounts and that these accounts are separate from those of the owners. This principle recognizes that a business is an entity separate from the individuals who own it or who work for it. It requires businesses to keep accurate and complete records of their transactions and to prepare financial statements that reflect the business's financial position, performance, and cash flows.

Question 4

The generally accepted accounting principle that indicates that once an accounting method has been chosen by management, this should be used from period to period unless a change is necessary and this change must be disclosed is the _______________.

Accepted Answer

The consistency principle requires that an accounting method be consistently used from period to period unless a change is necessary and this change must be disclosed in the financial statements.

Question 5

According to the generally accepted accounting principles, the conservatism principle is the ______________.

Accepted Answer

The conservatism principle in accounting dictates that potential expenses and liabilities should be recognized immediately, but revenues should only be recognized when they are assured, thus providing a conservative stance on financial reporting to avoid overstatement of financial health.

Question 6

The generally accepted accounting principle that indicates that events or information must be accounted for if they make a difference to the user of the financial information is the _____________.

Accepted Answer

The materiality principle states that events or information must be accounted for if they make a difference to the user of the financial information. In other words, only material information should be reported in financial statements. The other principles listed (objectivity, full disclosure, and matching) are also generally accepted accounting principles, but they do not specifically address the importance of materiality.

Question 7

The generally accepted accounting principle that indicates that revenues are only recognised when they are earned is the __________.

Accepted Answer

The generally accepted accounting principle that indicates that revenues are only recognised when they are earned is the realisation principle. This principle states that revenue can only be recognised when the earning process is complete, and there is reasonable certainty about the collection of payment.

Question 8

The Green Hotel bought some kitchen equipment at € 18,000.00. The producers had initially informed them that the value was really € 21,500.00. It is expected that the equipment will have a market value of € 16,500.00 in six months.Based on the cost principle of the GAAP, what should be the recorded value of the kitchen equipment in the books of the Green Hotel on the purchase date?

Accepted Answer

According to the cost principle of the GAAP, assets should be recorded at their actual cost, which in this case is € 18,000.00, the amount the Green Hotel paid for the kitchen equipment. The initial value provided by the producer is not relevant for accounting purposes. The expected market value in six months is also not relevant for the initial recording of the asset.

Question 9

Which option contains the four major business values contained in the various branches of accounting?

Accepted Answer

The four major business values contained in the various branches of accounting are planning, communicating, controlling, and determining profit. These functions are essential for effective financial management and decision-making in businesses.

Question 10

Which one of the following activities DOES NOT form part of the main purpose of budgeting?

Accepted Answer

The main purpose of budgeting includes communication (to align goals and expectations), coordination (to allocate resources effectively), and evaluation (to measure performance and progress). While supervision may be a necessary component of budgeting to ensure compliance and proper execution, it is not the main purpose.

Question 11

Which of the following items WILL NOT be shown in the balance sheet of a hotel?

Accepted Answer

Customer loyalty value is an intangible asset and may be included in a hotel's balance sheet, but it is not always shown as it depends on the accounting policies of the hotel. Accounts payable and accrued taxes are liabilities that will appear in the balance sheet. Intangible assets such as trademarks, patents and goodwill may also appear on the balance sheet.

Question 12

Which section of the balance sheet generally changes with the type of company?

Accepted Answer

The owners' equity section changes with the type of company because it reflects the ownership structure, which can vary significantly between sole proprietorships, partnerships, and corporations.

Question 13

Which of the following questions CANNOT be answered when analysing the information presented in an income statement?

Accepted Answer

The income statement provides information on revenues, expenses, and net income. It does not reveal information about the cash balance. The cash balance can be found on the balance sheet or statement of cash flows. B, C, and D are all questions that can be answered by looking at the income statement.

Question 14

What a hospitality organisation generates from activities, other than its primary business activity, will be shown in its income statement as _______.

Accepted Answer

Gains are the income which a hospitality organization generates from activities other than its primary business activity, such as sale of non-current assets or other investments. These gains are shown in the income statement as separate line items and are not considered as revenues. Expenses are the costs incurred during the primary business activity. Losses are the negative impact of business activities or events. Revenues are the income generated from the primary business activity.

Question 15

Which of the following stakeholders will consider using a company's cash flow statement to assess its ability to generate enough cash from its operations?

Accepted Answer

Creditors, investors, and suppliers are all stakeholders who would be interested in a company's ability to generate cash from its operations. Creditors want to ensure the company can make interest and principal payments on debt, investors want to see positive cash flow as a sign of profitability and sustainability, and suppliers want to ensure the company can pay its bills on time.

Question 16

A hotel's beginning retained earnings were € 70,000.00. In the course of the year, it had a net loss of € 14,000.00, and paid out dividends of € 8,000.00.What will be the hotel's ending level of retained earnings?

Accepted Answer

The hotel's ending retained earnings are calculated by subtracting the net loss and dividends from the beginning retained earnings: €70,000 - €14,000 - €8,000 = €48,000.

Question 17

A hospitality operation's daily routines generate a vast amount of data, which are indicated in various reports.What is the name of the report that provides an overview of all revenues and payments for individual accounts over a selected period of time?

Accepted Answer

The accounting report provides an overview of all revenues and payments for individual accounts over a selected period of time, summarizing the financial transactions and status of an operation.

Question 18

Which section within a hotel is principally responsible for managing guest accounts?

Accepted Answer

The Front Office is the section within a hotel that is responsible for guest accounts, including checking guests in and out, handling payments, and managing reservations. The Finance Office may be involved in financial management and accounting for the hotel as a whole, but guest accounts specifically fall under the purview of the Front Office. The Accounts Office and Credit Office may exist within a hotel but are typically not directly responsible for guest accounts.

Question 19

There are three basic objectives of a good accounting system within a hotel.Which option below IS NOT one of the objectives of a good accounting system?

Accepted Answer

While ensuring salaries and wages are in line with financial performance may be a concern for a hotel, it is not one of the primary objectives of a good accounting system. The three primary objectives are maintaining accurate and up-to-date guest accounts, ensuring payments are received in full and promptly, and providing management with accurate and up-to-date financial reports.

Question 20

Within a hotel, the verification of the accuracy of transactions is called_______.

Accepted Answer

Auditing is the process of verifying the accuracy and completeness of financial transactions within a business or organization. In the context of a hotel, auditing would involve reviewing records and transactions to ensure that they are accurate and free from errors or discrepancies. This helps to maintain the integrity of financial data and ensure that the hotel's financial statements are reliable and accurate. Accounting, bookkeeping, and posting are all related to the recording and management of financial transactions, but they do not necessarily involve the verification or auditing of those transactions.

Quiz 7: Financial Control and the Accounting Department

According to the generally accepted accounting principles (GAAP) , the full disclosure principle of accounting is ___________.