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Hospitality Management Accounting 8th Edition Michael M. Coltman, Martin G. Jagels - Solutions
12. List the special procedures that are necessary for control of payroll and distribution of paychecks.
11. In paying invoices by check, how can control be established?
10. Describe how a petty cash fund is established.
9. Why should all cash receipts be deposited intact each day in the bank?
8. List and briefly discuss appropriate procedures for control over product storage and explain how perpetual inventory cards can be used in inventory control.
7. List the five documents or forms used for control of purchases. Briefly explain the use of any two of these documents.
6. What does the term division of responsibilities mean?
5. Explain how lapping works.
4. Explain what separation of record keeping from control of assets means.
3. Why is it necessary to define responsibility for particular jobs?
2. Define collusion and explain why you think it is difficult to detect.
1. What are the two basic requirements for an internal control system?
10. Store all items in the proper storage locations as soon after delivery as possible.
9. If goods are short-shipped or if quality is unacceptable, prepare a credit memorandum invoice listing items missing or returned and obtain the delivery driver’s signature acknowledging the driver is returning with the noted items or that they were short-shipped; staple the credit memorandum to
8. If goods were delivered without an invoice, prepare a memorandum invoice listing name of supplier, date of delivery, count or weight of items, and, from the market quotation sheet, price of the items.
7. Check prices on the invoice against prices quoted on the market quotation sheet.
6. Spot check case goods to ensure that they are full and that all items in the case are of the same quality.
5. If specifications were prepared and sent to the supplier, check the quality against these specifications.
4. Check that the items are of the quality desired.
3. Check the count or weight figure against the count or weight figure on the invoice accompanying the delivery.
2. Weigh each item that is delivered by weight (such as meat).
1. Count each item that can be counted (number of cases or number of individual items).
11 Calculate a standard food or beverage cost from given information.
10 Complete a bank reconciliation.
9 List the procedures necessary to control payroll disbursements.
8 Explain briefly how control can be established over cash receipts and cash disbursements.
7 Describe how a petty cash fund operates.
6 List and discuss the proper procedures for product storage and inventory control.
5 List and briefly discuss each of the five control documents used to control purchases.
4 Explain how lapping can be used for fraudulent purposes.
3 Briefly discuss some of the basic principles of good internal control, such as defining job responsibilities, separating record keeping from control of assets, and dividing responsibilities for related tasks.
2 Briefly describe the two basic requirements for good internal control.
1 Define the purpose of internal control.
P4.12 Owners of a catering company also own a number of relatively small coffee shops, one of which shows excellent potential to increase its sales revenue. Selected annual operating figures are Annual sales revenue $370,000 Cost of sales (40% of revenue) 148,000 Payroll expense 103,600 Other
P4.11 A Resort Hotel has 75 guest rooms and a small dining room with 40 seats. The hotel recorded the following information for the month of March.Room revenue was $91,108.A total of 1,798 rooms were occupied.A total of 3,417 guests are using the 1,798 rooms occupied.Dining room food revenue was
P4.10 A restaurant has the following statistical information calculated from its financial statements for the past three years:Using this information, answer each of the following questions and explain your answer. A simple yes, no, more, less, or maybe won’t do! A comment is required in each
P4.9 A restaurant has the following statistical information calculated from its financial statements for the past three years:Using this information, answer each of the following questions and explain your answer. A simple yes, no, more, less, or maybe won’t do!a. Are current assets in relation
P4.8 The owners of a cocktail bar have the following annual income statement information:Annual sales revenue $210,000 Cost of sales (30% of revenue) 63,000 Payroll expense 50,000 Other operating expenses 20,000 Direct expenses (charges including depreciation) 40,000 The owners are considering new
P4.7 You have the following information from a restaurant operation:From the information given, calculate the following:a. Working capital for Years 0007 and 0008b. Current ratio for Years 0007 and 0008c. Credit card receivables as a percentage of credit card revenue for Year 0008
P4.6 In addition to the information given in Problem 4.5, an income statement for the hotel for Year 0005 is available:Sales revenue $851,800 Operating costs (7 For Year 0005, calculate the following:a. Gross return on assetsb. Net return on assetsc. Number of times interest is earnedd. Net income
P4.5 You have the following information taken from the balance sheets for two successive years for a hotel operation.For each year calculate:a. Total assets to total liabilities ratiob. Total liabilities to total assets ratioc. Total liabilities to total ownership equity Discuss the changes that
P4.4 A fire occurred in a friend’s restaurant overnight on December 31, 0005, and the friend has asked for your help. Although many accounting records were lost, some were recovered. With the recovered records and information obtained from outside sources, you believe a balance sheet can be
P4.3 With reference to the information in P4.2, use a common-size vertical analysis to determine the composition of current assets and current liabilities for Years 0003 and 0004. Discuss the results.
P4.2 You have information (on the next page) regarding current assets and current liabilities of a restaurant operation for two successive years:Calculate the following for Years 0003 and 0004:a. Working capitalb. Current ratio
P4.1 A small restaurant reported the following current assets at year’s end:Cash $1,840, accounts receivable $220, credit card receivables $480, food inventories $1,340, prepaid insurance $400, and prepaid rent $1,000. Current liabilities were $2,112. Complete a common-size vertical analysis of
E4.10 Prepare a comparative horizontal analysis of the change in each current asset account from Year 1 to Year 2. Express each change in dollars and the percentage each change represents. Comment on each change that exceeds 10 percent. What, if anything, would you do as a manager?
E4.9 Assume you were given information regarding current ratios for three consecutive years. Can you determine the general condition of liquidity without calculating working capital? If the following ratios apply to a restaurant, would the ratio for Year 3 be considered adequate? Explain your
E4.8 Information showing total assets and total liabilities for two consecutive operating years is given below:Calculate the total assets to total liabilities ratio for both years and comment on the change. Do any additional analysis you need so you can comment on these figures.
E4.7 A restaurant and beverage operation reported the following for the operating month of March, which had 23 operating days.Food service inventory:For the month of March, calculate the food inventory turnover ratio and inventory holding period in days that it takes for food inventory to turn over.
E4.6 You are given the ending working capital for two consecutive years: Year 1 was $10,500, and Year 2 is $11,550. Sales revenue for Year 2 is$878,444. Calculate the working capital turnover ratio.
E4.5 Total current assets reported for an operation were $86,100 and total current liabilities were $62,400. Determine working capital for the period and define its structure and purpose.
E4.4 The following is an extract of restaurant and beverage operation for two months of operations:Month 1 Month 2 Cash $11,270 $13,524 Credit card receivables 2,890 2,933 Accounts receivable Complete a common-size vertical analysis of quick assets for both months and comment on the changes to
E4.3 On March 31, a restaurant reported credit card revenues of $56,280.Credit card receivables began with a balance of $2,884 and ended the month with a balance of $3,120. Answer the following:a. What is the average of credit card receivables?b. What does credit card receivables represent as a
E4.2 Referring to information in Exercise 4.1, calculate working capital and describe what it means.
E4.1 A restaurant reported the following current assets: cash $12,000, credit card receivables $1,800, accounts receivable $180, food inventory $4,400, and prepaid expenses, $1,120. Current liabilities total $7,800. Answer the following:a. Calculate the current ratio.b. Calculate the quick ratio
20. What is the advantage of calculating the inventory holding period in days?
19. List and discuss three operating ratios that could be used in a rooms operation.
18. List four possible operating ratios that could be used in a food operation.
17. Discuss the term financial leverage, or trading on the equity.
16. State how revenue per available room is calculated.
15. What does the return on stockholders’ equity measure?
14. Discuss the purpose of a quick ratio.
13. How does the net return on assets ratio differ from the gross return on assets ratio, and why is its calculation valuable?
12. Explain the gross return on assets ratio measure; what value is it to a potential creditor?
11. State the equation for the credit card turnover ratio.
10. Why can the book values of assets be misleading when used in the total assets to total liabilities ratio, or the total liabilities to total assets ratio?
9. Why is a high total asset to total liabilities ratio desired by creditors?
8. Define the term profitability.
7. Explain why the calculation of a credit card receivables average collection period is a meaningful statistic.
6. Why is maintaining a current ratio that is too high not a good business practice?
5. Why can a hotel, motel, or restaurant usually operate with a current ratio considerably lower than other types of businesses, such as manufacturing companies?
4. What is the value in calculating a current ratio? Contrast how creditors and owners view this ratio.
3. Which three groups are the main users of financial ratios?
2. List and briefly discuss the four bases on which a ratio can be compared.
1. Describe the three ways in which a ratio can be expressed.
13 Define financial leverage and explain why is it used.
12 Explain the difference between operating income and net income.
11 Explain the meaning of gross margin.
10 List and describe at least five rooms operating ratios.
9 List and describe at least five food and beverage operating ratios.
8 Discuss the importance of inventory turnover ratios.
7 List and briefly explain each of the activity ratios.
6 List and briefly describe each of the profitability ratios.
5 List and briefly explain each of the solvency ratios.
4 Explain the purpose of an analysis of credit card receivables.
3 List and briefly explain each of the current liquidity ratios discussed and illustrated.
2 Explain why creditors are normally concerned with specific areas of financial statements.
1 Explain the differences between creditors, owners, and managers in what they look for in financial statements.
P3.14 A motel had the following annual sales revenue and average room rate figures for the last five years. During this five-year period, there were no changes in the number or type of rooms available and the type of clientele remained the same.Prepare index numbers from the average room rates. Use
P3.13 Assume that appropriate general index numbers for restaurant revenue and restaurant food and beverage costs were as follows for the six periods referred to in Problem 3.12.Convert the historic dollars of revenue and the historic dollars of cost of sales in Problem 3.12 to current dollars and
P3.12 You have the following information about the revenue, cost of sales, and accounts receivable for six consecutive periods for a restaurant:For each of the three items, calculate trend percentages. Using the results from this analysis, discuss whether or not the situation developing for this
P3.11 You have the following information about Hotshot Hotel’s dining room for the months of October and November:Use this information to comment about the dining room’s operating results for October and November.
P3.10 Freddy’s Fried Chicken provides you with the following information from 2 successive months of his operation:Using the above information, complete the following:a. Convert the income statement to common-size vertical analysis.b. Convert the income statement to a comparative horizontal
P3.9 You have the following information concerning a fast-food restaurant for three consecutive months.Convert the consolidated income statements to common size. Use the number of customers to prepare additional analyses. Comment on what is happening in this operation using the information you have
P3.8 Using the information presented in Problem 3.7, present in proper format a common-size vertical income statement analysis. Comment on any significant results noted.
P3.7 Two successive monthly income statements for the food department of a motor lodge are shown below. Present the income statements in a comparative horizontal analysis format.
P3.6 A motel had the following annual sales revenue and average room rate figures for the last five years. During this five-year period there were no changes in the number or type of rooms available and the clientele remained basically the same.Annual Average Year Sales Revenue Room Rate 1
P3.5 The sales revenue, food cost of sales, and guests served for a small fastfood carryout division of a restaurant for the past six months are given below.For each of the six months calculate average check and average costs of sales food. Using these averages, calculate an index number. Set the
P3.4 A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B:The owners of the restaurants are concerned that restaurant B reports higher sales revenue, yet produces a lower operating income than restaurant A. Convert
P3.3 The following information has been extracted from a hotel’s food department for the months of August and September.a. Calculate average check per guest for each sales revenue division for the months of August and September.b. Calculate the average cost per guest and total average cost for
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