Question

Among rooms, food, telephone, property operations & maintenance, rent, interest, Good will, and income taxes list and briefly discuss 5 account that you as a managers would be interested in investigating and why?

Answer 1

1. Goodwill - There are multiple types of goodwill that are part of the Assets side of the Balance Sheet. It can be trademarks, secret formulae, self-generated goodwill or purchased goodwill. It is always important to keep an eye on the accounting on goodwill at regular intervals as these are typically intangible assets, meaning they do not physically exist, but still tend to boost our balance sheet value. It is a good practice to especially look into the value of the self-generated goodwill and ensure it is not inflated and in case of any adverse changes to the company, proper adjustments have been made to the account.
2. Property Operations & Maintenance - One of the major expenses in running of a hotel is the operations and maintenance expenses. This includes staff, electricity, water and any other expense that is prudent in running of a hotel. This type of expense is also partially variable based on electricity consumed, water used, any repairs done, etc. The variable quotient depends on the season. For example, in summers, electricity consumption will be more in a hot area (A/C, pool usage, etc.) whereas electricity consumption will be relatively less in colder areas during summers as compared to winters. It is pertinent to investigate and ensure all accounts are properly updated.
3. Telephone - Telephone expenses include those utilitzed by the tenants or customers who stay at the property as well. In this account, we need to ensure that expenses incurred by the customers are properly charged back to them as part of their bill and only the telephone expenses attributable to the staff and running of the hotel is part of our Profit and Loss account
4. Food - Food is another major expense incurred on behalf of the customer. It is so often given as complimentary amenity to the customer and hence accounting for Food's revenue versus material is a little more complicated than others like Room or Telephone. The margin that is employed on food will also be different from that of rooms. With changing economic conditions, and constant changes in the cost of raw materials, it is important to investigate and ensure that the margin on food is not compromised.
5. Rooms - The major revenue making aspect of a hotel is the rental income from Rooms. Now, the fee charged for renting out rooms will usually be a comprehensive fee including part food, amenities around the hotel and sometimes complimentary gifts. It is also to be noted that income from Rooms gets accounted through various channels. In advent of technology and the existence of multiple platforms (MakeMyTrip, Trivago, etc.), it is very important that rates are uniform, any promotions or discounts applied are properly accounted and the revenue is accrued based on the accounting principles applied by the management. Not to mention the fact that when payment is received, it gets properly accounted to the right month.