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Accounting and Financial Analysis in the Hospitality Industry 1st Edition by Johnathan Hales ,Hubert Van Hoof
النسخة 1الرقم المعياري الدولي: 978-0132458665Accounting and Financial Analysis in the Hospitality Industry 1st Edition by Johnathan Hales ,Hubert Van Hoof
النسخة 1الرقم المعياري الدولي: 978-0132458665 تمرين 1
Name and describe the three main financial statements of a business. Include the characteristics of each financial statement.
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Naming and describing the three main financial statements of a business, including the characteristics of each financial statement.
It is vital for any business organization to understand the importance of financial statements. These financial statements are helpful in describing and evaluating the operations and financial standing of a business enterprise. The three main financial statements for any business enterprise are:
Profit and loss statement: It is also known as the income statement is one that measures the operating success and financial profitability or loss incurred by an organization on the basis of the daily operations of the business. The key characteristics of the profit and loss statement are:
• It is prepared for a definite time period, for instance a year, a month, a quarter etc.
• It represents the financial data in form of expenses, revenues, profits or losses incurred for a specific time period.
• It helps in evaluating performance in terms of other related measures such as budget, last year's performance etc.
• In comprises of a summarized P L statement along with the supporting profit and loss statement of all other departments as well.
• A fresh P L statement is generated every month or the time period decided for in which the current month's information and year-to date information are recorded.
• Managers are required to analyze the financial statement critically and draw the strengths and weaknesses from other support documents such as budgets, forecasts etc.
Balance Sheet: or Asset and Liability Statement is a statement that is used to measure the value or total worth of a business. It measures the worth of an organization at a particular period. The key characteristics of a balance sheet are:
• It is a tool to measure the value or total worth of a business at a given period of time.
• It is represented in equation form as Assets = Liabilities + Owner's Equity.
• It consists of three categorization of accounts; assets, liabilities and owner's equity.
• Each of the accounts mentioned above would have an opening balance, a monthly activity and a closing balance.
• Critical review of the statement is not required by managers, however accounting department utilizes the information as and when the need arises.
• At the end of every month, the accounting managers are required to reconcile the three accounts of the balance sheet to give an updated view of the company's financial standing.
Cash Flow Statement : is one that measures the liquidity or the inflow and outflow of cash in a business for any given period. Statements reflect upon the cash account of a business. All sales are a part of company's revenues and all expenses cash outflow. The statement helps the managers to understand the level of liquidity in a business at a certain time period and accordingly plan for future operating obligations. Key characteristics of a cash flow statement are:
• It represents the cash account of a business.
• It has both opening and closing balance.
• It reflects the usage of money in the operating activities of a business.
• It measures the company's liquidity position at a given period of time.
• It a fundamental component of evaluating company's total working capital.
• It affects the increase or decrease in the balance sheet account.
It is vital for any business organization to understand the importance of financial statements. These financial statements are helpful in describing and evaluating the operations and financial standing of a business enterprise. The three main financial statements for any business enterprise are:
Profit and loss statement: It is also known as the income statement is one that measures the operating success and financial profitability or loss incurred by an organization on the basis of the daily operations of the business. The key characteristics of the profit and loss statement are:
• It is prepared for a definite time period, for instance a year, a month, a quarter etc.
• It represents the financial data in form of expenses, revenues, profits or losses incurred for a specific time period.
• It helps in evaluating performance in terms of other related measures such as budget, last year's performance etc.
• In comprises of a summarized P L statement along with the supporting profit and loss statement of all other departments as well.
• A fresh P L statement is generated every month or the time period decided for in which the current month's information and year-to date information are recorded.
• Managers are required to analyze the financial statement critically and draw the strengths and weaknesses from other support documents such as budgets, forecasts etc.
Balance Sheet: or Asset and Liability Statement is a statement that is used to measure the value or total worth of a business. It measures the worth of an organization at a particular period. The key characteristics of a balance sheet are:
• It is a tool to measure the value or total worth of a business at a given period of time.
• It is represented in equation form as Assets = Liabilities + Owner's Equity.
• It consists of three categorization of accounts; assets, liabilities and owner's equity.
• Each of the accounts mentioned above would have an opening balance, a monthly activity and a closing balance.
• Critical review of the statement is not required by managers, however accounting department utilizes the information as and when the need arises.
• At the end of every month, the accounting managers are required to reconcile the three accounts of the balance sheet to give an updated view of the company's financial standing.
Cash Flow Statement : is one that measures the liquidity or the inflow and outflow of cash in a business for any given period. Statements reflect upon the cash account of a business. All sales are a part of company's revenues and all expenses cash outflow. The statement helps the managers to understand the level of liquidity in a business at a certain time period and accordingly plan for future operating obligations. Key characteristics of a cash flow statement are:
• It represents the cash account of a business.
• It has both opening and closing balance.
• It reflects the usage of money in the operating activities of a business.
• It measures the company's liquidity position at a given period of time.
• It a fundamental component of evaluating company's total working capital.
• It affects the increase or decrease in the balance sheet account.
Accounting and Financial Analysis in the Hospitality Industry 1st Edition by Johnathan Hales ,Hubert Van Hoof
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