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Gaap

Generally Accepted Accounting Principles (GAAP) are the common standards and procedures used to compile financial statements. For the hospitality industry, the Uniform System of Accounts for the Lodging Industry (USALI) provides operating statements with relevant data for hotel owners and managers. The training document reviews key accounting concepts like accruals, prepaid expenses, and account coding challenges. It provides examples of accruals for expenses incurred but not yet invoiced and allocating prepaid expenses over multiple periods. Coding variations between properties and the importance of detailed descriptions are also discussed.

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Debbie Langolf
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603 views

Gaap

Generally Accepted Accounting Principles (GAAP) are the common standards and procedures used to compile financial statements. For the hospitality industry, the Uniform System of Accounts for the Lodging Industry (USALI) provides operating statements with relevant data for hotel owners and managers. The training document reviews key accounting concepts like accruals, prepaid expenses, and account coding challenges. It provides examples of accruals for expenses incurred but not yet invoiced and allocating prepaid expenses over multiple periods. Coding variations between properties and the importance of detailed descriptions are also discussed.

Uploaded by

Debbie Langolf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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GAAP

Training

What is GAAP?
Generally Accepted Accounting Principles
-The common set of accounting principles, standards and
procedures that companies use to compile their financial
statements.
-GAAP are a combination of authoritative standards, set by
policy boards, and are simply the commonly accepted ways
of recording and reporting accounting information.

GAAP for Hospitality


USALI
-Uniform

System of Accounts for the Lodging

Industry
-The primary purpose of the Uniform System of Accounts for
the Lodging Industry is to provide operating statements that
are formatted to provide hotel owners, managers, and other
interested parties with information and data that is pertinent
to the unique operating environment of the lodging industry.

What will we be
reviewing?
- Accruals
- PrePaid Expenses
- Franchise Fee Coding
- Other Miscellaneous Account Coding: Challenges
& Variances
- General Notes on Accounting Procedures

Accruals - What is an
Accrual?
-Recognizing an Expense when it is Incurred
Regardless of when Cash is Disbursed.
EXAMPLE: Linen order received/consumed in October Invoice
Not Received
until November.
OctoberO
ACCRUAL:
Debit Linen
+400.00
Credit Accrued Other
-400.00

NovemberO
REVERSE ACCRUAL:
Credit Linen
-400.00
Debit
Accrued
Other
INVOICE
RECEIVED:
+400.00
Debit Linen
+400.00
November NET CHANGE IN
LINEN = 0

Accruals - What do we
Expenses for any goods or services that were
Accrue?
consumed in the month, for which no invoice has
received yet.
been
Utilities

Example: Your Electricity bill only covers service through the 23 rd


of September. We need to accrue the cost for the 24th through the
30th. Your accurate meter readings on the 1st of the month will
allowAgent
this costCommissions
to be calculated.
Travel
Typically, most of your TA Commission invoices will not arrive until
after the month is closed. A percentage of revenue based on prior
month trends will be calculated and accrued.

Group Commissions
Properties need to track their Groups on a monthly basis and
estimate what, if any, commissions will need to be paid. These
commissions will need to be accrued into the month the business
was consumed.

Franchise, Reservation Fees & Loyalty Program


Expense
Depending on the Franchise, we may not receive an actual
Franchise Invoice until the middle of the following month.
Franchise Fees are typically a percentage of your revenue or, in
some cases, a flat fee. This will be calculated and accrued.
Reservation Fee estimates are calculated on a percentage of your
revenue based on prior month trends.
Fleet
Loyalty
Program
Expense will also be calculated on a percentage
Card
Expenses
and
accrued
asgas
such.
ofIfrevenue
you have
incurred
any
or repair expenses in the month,
these will need to be gathered and accrued into Guest
Transportation or Vehicle Repairs

COST OF SALES
Any costs incurred for revenues by any of the following revenue
generators will need to be accrued into the month.
Audio Visual
What was our cost in generating the A/V revenue for the
month?
Guest Movies
How much is the bill we will be receiving for movies
watched by guests?
Guest Laundry
How much will be charged by your local dry cleaner for
the laundry that was sent out by guests?

Your reports and accurate information are crucial in all of these very
important accruals!

PrePaid Expense- What is a


PrePaid?
-Expenditure that is paid for in one month, but
will not be consumed until a future period or
multiple
future
periods.
EXAMPLE:
SINGLE
PERIODDOS purchased flight in October for travel in November to a
Trade Show
OctoberO
INVOICE RECEIVED:
Debit Prepaid General

NovemberO

+265.00

ALLOCATION:
Credit Prepaid General
Debit Travel

-265.00
+265.00

PrePaid Expense- Multiple


Periods
EXAMPLE:
Convention & Visitors Bureau Annual Dues for 10/201509/2016
Invoice is for 2400.00 for 12 months of Dues
OctoberO
INVOICE RECEIVED:
Debit Prepaid General
+2400.00
ALLOCATION:
Credit Prepaid General
-200.00
Debit Dues & Subs
+200.00
BALANCE REMAINING IN PREPAID:
2400.00 200.00 = 2200.00

NovemberO
ALLOCATION:
Credit Prepaid General
Debit Dues & Subs

-200.00
+200.00

BALANCE REMAINING IN PREPAID:


2200.00 200.00 = 2000.00
(Continued for
10 more months)

Account Coding
Franchise Invoices- Coding and
Challenges
Travel Agent Commissions VS Reservations
Expense:
GDS = Reservations ExpenseTA Commission

4070540000

23,956.09
Reservations Expense 4073860000
3,120.15

Account Coding
Franchise Invoices- Coding and
Challenges
Res/Max = Reservations Expense

Reservations Expense 4073860000


3,410.76

Any Offsite Reservations Expense


should be coded here

Account Coding
Franchise Invoices- Coding and
Challenges
Reimbursement Credits/Free Night
Reimbursements
Loyalty Program 7272700000
31,765.02
A/R Clearing
22000100
(13,690.47)
=
TOTAL INVOICE
Enter as a
18,074.55
negative
Post as Payment
Received in City
Ledger to offset

Account Coding
Other Notable Coding Challenges- Common
- Where would
you code Armored Car
Mistakes:
Service? A&G Bank Charges?

A&G Security

- Where would you code Newspapers that are


Media?
Rooms Comp Services & Gifts
free to guests?

Coding Variations:
ITEM

PRIOR Coding

CORRECT ATRIUM Coding

Warehousing/Storage

Warehouse Service

Rent-Property & Equip 9173820000

Group Commissions

Group Booking Expense

Commissions & Fees-Group


4070580000

PMS, POS, Sales, R&M Software


Maintenance

Systems Expenses

IT Department (71) to their Respective


Lines

Telephone Repairs & Costs

Telephone COS & Repairs

IT Department (71) to their Respective


Lines

Any Associate Relations Item

Employee Relations/Recruiting/Etc

Human Resources 7071940000

Management Accounting Fees

WHI Accounting Fees

There are no Atrium Accounting Fees

Account Coding
Other Notable Coding Differences and
Variations:

Transportation Expense:
Guest Transportation
VS
Vehicle Repairs
Gas Expense
Maintenance/Repairs
4071900000
7374500000
Taxi/Cab Costs
Oil Changes, etc.

A&G Security
Contract Labor
47073940000
One-Time
Events
Security

Protection/Security Expense:
VS

A&G

7068100000
Full-Time, 3rd Party

Account Coding

Always include WHAT/WHY in the Description


Help us determine if your coding is correct!
EXAMPLE DESCRIPTION: Water Testing
Water Testing for the Kitchen?
Water Testing for the Swimming Pool?
BETTER DESCRIPTION:
Pool Water Testing

Account Coding
Coding Challenges
What if you have Coding Questions?
- Ask your Staff Accountant
- Your Staff Accountant can send you a Cheat
Sheet on
Coding for your specific Franchise
- Ask the Director of Field Accounting
- Ask the Director of Audit & Compliance

General Accounting
- Invoices should be entered and posted as received- DO NOT HOLD
Notes
INVOICES Invoices should be entered no less than 2x
per week
DONT WAIT FOR END OF MONTH!

- Expense Reports should be processed through


PAYROLL > Do not write a Managers Check
- Mangers Checks should be sent to your Staff Accountant on a
> Checks may be rejected by the bank if they are not
DAILY BASIS
properly recorded on a daily basis through Reverse
Positive Pay
- Provision for Doubtful Accounts / Bad Debt
> This account should be used only for items that apply
to Bad Debt as noted in SOP ACCTG AR004. This account
is restricted to true Bad Debt Write Offs and may not be
used for revenue adjustments, chargebacks, or out of
balance adjustments.

Any Questions?

Thanks for joining us!


Have a
great day!

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