Deck 1: Hospitality Accounting in Action

Question 1

Which of the following would not be considered an internal user of accounting data for the Harris Country Club?

A)Human resources manager
B)Golf shop manager
C)Executive chef
D)Internal revenue service agent

Answer 1

D

Question 2

Revenues are the stockholders' investment in the business.

Answer 2

False

Question 3

Internal transactions do not affect the basic accounting equation because they are economic events that occur entirely within one company.

Answer 3

False

Question 4

Accountants rely on a fundamental business concept-ethical behavior-in reporting financial information.

Question 5

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

A)Identification
B)Communication
C)Recording
D)Analysis

Question 6

The cost principle states that assets should be recorded at their fair market value.

Question 7

The basic accounting equation states that Assets + Stockholders' Equity = Liabilities.

Question 8

Generally accepted accounting principles are

A)guidelines that indicate how to report economic events.
B)income tax regulations of the Internal Revenue Service.
C)theories that are based on physical laws of the universe.
D)principles that have been proven correct by academic researchers.

Question 9

GAAP stands for

A)Generally Accepted Auditing Procedures.
B)Generally Accepted Accounting Principles.
C)Generally Accepted Auditing Principles.
D)Generally Accepted Accounting Procedures.

Question 10

In the accounting cycle information flows from the accounting department to the front and back of the house.

Question 11

Communication of economic events is the part of the accounting process that involves

A)identifying economic events.
B)preparing and distributing accounting reports.
C)quantifying transactions into dollars and cents.
D)recording and classifying information.

Question 12

Ethics are the standards of conduct by which actions are judged as

A)right or wrong.
B)honest or dishonest.
C)fair or unfair.
D)all of these.

Question 13

Which of the following would not be considered an external user of accounting data for the Harris Country Club?

A)President of the employees' labor union
B)Chief financial officer
C)Lenders
D)Club members

Question 14

Accounting communicates financial information about a business enterprise to both internal and external users.

Question 15

The SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles.It is true that

A)they are both governmental agencies.
B)the SEC is a private organization of accountants.
C)the SEC often mandates guidelines when no accounting principles exist.
D)the SEC and FASB rarely cooperate in developing accounting standards.

Question 16

In order, the accounting process consists of

A)recording, identifying, and communicating accounting information.
B)identifying, communicating, and recording accounting information.
C)communicating, identifying, and recording accounting information.
D)identifying, recording and communicating accounting information.

Question 17

The cost principle requires that when assets are acquired, they be recorded at

A)appraisal value.
B)exchange price paid.
C)selling price.
D)list price.

Question 18

Hospitality managers are the only people who need financial accounting information.

Question 19

The Securities and Exchange Commission has the power to enforce the form and content of financial statements of all businesses.

Question 20

The economic entity assumption requires that the activities of

A)different entities be combined if all the entities are corporations.
B)all entities be reported to the Securities and Exchange Commission.
C)a sole proprietorship be combined with the personal economic events of its owners.
D)an entity be kept separate from its owners' activities.

Question 21

The common characteristic possessed by all assets is

A)long life.
B)future economic benefit.
C)tangible nature.
D)monetary value.

Question 22

Liabilities

A)are future economic benefits.
B)are existing debts and obligations.
C)possess service potential.
D)are things of value used by the business in its operation.

Question 23

Stockholders' equity is often referred to as

A)excess net income.
B)leftovers.
C)residual equity.
D)second equity.

Question 24

The basic accounting equation may be expressed as

A)Assets = Equities.
B)Assets - Liabilities = Stockholders' Equity.
C)Assets = Liabilities + Stockholders' Equity.
D)all of these.

Question 25

A basic assumption that requires that the activities of an entity be kept separate from its owners' activities is referred to as the

A)stand alone concept.
B)monetary unit assumption.
C)corporate form of ownership.
D)economic entity assumption.

Question 26

A basic assumption of accounting assumes that the dollar is

A)unrelated to business transactions.
B)a poor measure of economic activities.
C)the common unit of measure for all business transactions.
D)useless in measuring an economic event.

Question 27

Which one of the following is not typically found on the executive committee at a hotel?

A)General manager
B)Controller
C)Concierge
D)Marketing Director

Question 28

The size of a hotel's accounting department depends on the

A)number of guests.
B)size of the hotel.
C)number of employees.
D)number of reservations.

Question 29

Which one of the following is not a responsibility of a controller in the foodservice industry?

A)maintaining guest and city ledgers
B)accounting management
C)financial management
D)yield analysis

Question 30

Sources of increases to stockholders' equity are

A)additional investments by stockholders.
B)purchases of merchandise.
C)dividends.
D)expenses.

Question 31

Which one of the following presents the correct order for the accounting cycle?

A)Analyze transactions, post, adjusted trial balance, closing entries, post closing trial balance, financial statements
B)Post closing trial balance, closing entries, financial statements, adjusted trial balance adjustments, analyze transactions, journalize, post, trial balance
C)Analyze transactions, journalize, post, trial balance, adjustments, adjusted trial balance, financial statements, closing entries, post closing trial balance
D)Adjustments, trial balance, posting, journalize, analyze transactions

Question 32

Which one of the following accounting systems is not currently in use in the hospitality industry?

A)The Uniform System of Accounts for Restaurants
B)The Uniform Financial System for Gaming
C)The Uniform System of Financial Reporting for Clubs
D)The Uniform System of Accounts for the Lodging Industry

Question 33

Which of the following type of business provides ownership in transferable shares of stock?

A)Partnership
B)Corporation
C)Sole Proprietorship
D)Limited Liability Partnership

Question 34

Food cost analysis is important in a foodservice establishment because

A)food is expensive.
B)prices often fluctuate.
C)beverage sales account for 15 percent of sales.
D)food should not be wasted.

Question 35

The Uniform System of Accounts for Restaurants was developed to assist

A)managers with analyzing labor cost.
B)operators to interpret financial results.
C)owners in analyzing the success of their investment.
D)guests in determining whether they would want to dine at the establishment.

Question 36

This type of club membership permits the members to use only the food and beverage outlets.

A)social membership
B)full membership
C)athletic membership
D)dining membership

Question 37

Stockholders' equity is best depicted by the following:

A)Assets = Liabilities.
B)Liabilities + Assets.
C)Residual equity + Assets.
D)Assets - Liabilities.

Question 38

When cash or other assets are distributed to stockholders, these distributions are termed

A)depletions.
B)consumptions.
C)dividends.
D)a credit line.

Question 39

Information is communicated through the preparation of accounting reports, commonly called __________________.

Question 40

A common set of standards that provides guidelines to accountants and indicates how to report economic events is called _________________.

Question 41

The __________committee is made up of all the department heads of a hotel.This group comes together for meetings to make decisions and ensure all information is relayed correctly.

Question 42

The ________________ principle states that assets should be recorded at the value exchanged at the time the asset is acquired.

Question 43

Dividends ________________ stockholders' equity but are not expenses.