Question

Discuss why GAAP principles are important in financial accounting. Give examples of various transactions found in most hotels and which GAAP principles would apply.

(400 words required this sucject is hospitality accounting Please write clear your own thought or search the internet. Thank you!)

this is all the requestments

Answer 1

GAAP MEANS GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.AND IT CONTAINS VARIOUS RULES, GUIDELINES AND STANDARD WHICH ARE FOLLOWED FOR ACCOUNTING PURPOSES BY VARIOUS SECTORS OF INDUSTRY.IT PROVIDES THE VARIOUS RULES, GUIDELINES AND PROCEDURES TO PREPARE THE FINANCIAL STATEMENT SO THAT THE SAME CAN BE ULTIMATELY PRESENTED FOR DECISION-MAKING.GAAP HELPS USERS OF FINANCIAL STATEMENT TO EXAMINE THE EFFICIENCY AND EFFECTIVENESS OF FINANCIAL DATA PRESENTED TO THEM.USERS ARE ALSO ABLE TO DETERMINE THE COMPANY'S REAL STATUS AND POSITION THROUGH GAAP.

GAAP ASSURES THAT FINANCIAL DATA PREPARED ACCORDING TO IT REPRESENTS TRUE AND FAIR VIEW AND IS GIVING TRUE PICTURE OF COMPANY'S PERFORMANCE.ALSO THE FOLLOW OF GAAP PRINCIPLES ENSURES THAT THE PARTICULAR COMPANY HAS COMPLIED WITH ALMOST ALL THE LEGAL PROCEDURES AND FORMALITIES APPLICABLE TOO THEM IN ORDER TO ENSURE IT'S SMOOTH RUNNING.

THEREFORE IN OTHER WORDS WE CAN SAY THAT GAAP ULTIMATELY GIVES USERS OF FINANCIAL STATEMENT AND DATA A SENSE OF SATISFACTION REGARDING IT'S TRUTHNESS AND RELIABILITY.HENCE IT IS IMPORTANT.

EXAMPLES RELATED TO HOSPITALITY INDUSTRY-

1)-FOR REVENUE RECOGNITION BASICALLY CERTANITY AND ULTIMATE COLLECTION CRITERIA IS SEEN SO THAT ONLY THOSE HOTELS BILLS AND PAYMENTS ARE RECOGNISED WHICH ARE CERTAIN TO BE RECOGNISED AS REVENUE.

2)-FURTHER ANY PAYMENT WHICH IS REQUIRED TO BE REFUNDED IS NOT TO BE RECORDED AS REVENUE RATHER IT SHOULD BE TREATED AS LIABILITY.A EXAMPLE CAN BE LIKE ANY ADVANCE PAYMENT OR SOME DEPOSIT PAYMENT MADE AT THE TIME OF CHECK-IN.

3)AGAIN ANY PAYMENT REPRESENTING TIME-SCALE BASIS SHOULD BE RECORDED WITH RESPECT TO THE CORRESPONDING TIME AND NOT ON WHOLE BASIS AT A TIME.EXAMPLE LIKE RENT PAID FOR 2 MONTHS TOGETHER SHOULD BE RECORDED AND RECOGNISED SEPARATELY FOR EACH MONTH.