Question

Question:

After graduation, you head out to Reno and take a job with a casino as an accountant because you’re totes swol. You expected the accounting to be easy, but you come to find out that there are a

great deal of specifics that you had never expected to encounter. What do you do with customer comps, casino chips, slot machines which are leased to the casino by outside parties, and the major jackpots that may get awarded? You’re totally lost and need to make a short report describing the details of casino accounting.

This is a question for the minicase in my Intermediate Accounting class. Please help me answer this.

Answer 1

In casino industry, managing finances is a challenging task. This is because unlike the traditional accounting, the nature of casino business involves mainly handling of liquid assets. The accountant has to monitor earnings and the cash spent as expenditure. In the traditional businesses such as manufacturing and selling, it is easy to track expenses and revenue. However, in the casino business, money is converted into chips. This complicates things as tracking the chips redeemed and the ones kept as souvenirs by the players is difficult.

Table transactions and slots are done without any inscribed records which complicate the financial management in the casino business. Recording of financial transactions is not effective because money is in less tangible form, which are chips.

Therefore, accountants in casino business have to develop effective means of financial management by proper budgeting of its revenues and controlling the expenses such as leased machines by outside parties. Deterrence of theft of earnings by employees who take advantage of the liquid nature of the monetary assets is also part of accounting management.

As an accountant in the casino industry you will have to keep a constant tally of the drop. The total amount of currency exchanged by customers into casino chips or tokens is termed the "drop". The accountant will also have to keep an ongoing calculation of the casino’s “handle”. Handle is the total amount of wagers that is made by the customers at the casino. The accountant will have to retain statistics showing how the handle is allocated between the various gaming activities offered by the casino. The accountant will have to compute the casino’s win or loss from gaming on a daily basis. The computation process will be to use the figures of the drop minus the total of chips and tokens cashed back in by customers as a check on the accuracy of the win or loss figure. Profit and loss will be computed by adding the casino’s win or loss together with other revenue sources such as from drinks, food and parking fees in order to calculate total revenue. Tally the total operating expenses of the casino, including all applicable categories such as payroll, utilities, security and advertising expense. EBITDS and net income can then be easily computed.