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Quiz - Chapter 12

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Student Name Section

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True/False Questions. Circle either T for true or F for false:

1. Trade advertising contracts, sometimes called due bills, are used by hotels to exchange goods and services (such as advertising) for empty rooms, which means the due bills are used more during slow parts of the business cycle and used less during upturns. T F

2. Advanced deposits are debts that the hotel owes to guests who have paid for rooms in advance, but have not yet received service; they are, therefore, a liability owed by the hotel similar to room taxes that the hotel owes to local, municipal or provincial/territorial governments. T F

3. Small late charges are costly to administer (costs of accounting, record keeping, letter writing and guest relations), so they are frequently wiped off with an allowance rather than pursuing collection by mail or telephone. T F

4. Smart cards are not yet in general use, but there is some evidence of their eventual popularity in the stored-value cards used for telephoning and in Europe where they are used more widely under the term electronic purse. T F

5. To avoid the high discount rates associated with credit cards, hotels have been encouraging guests to settle their folios with cash (including personal cheques, travelers cheques and even foreign funds). T F

Multiple Choice Questions. Circle the one answer that best completes the thought:

6. Which of the following is (are) NOT likely to be divisions of the city ledger?

1. Banquet charges
2. Split folios
3. Travel agency accounts
4. Credit cards
5. None of the above; that is, they are all divisions of the city ledger

7. Everyone chases the float, which is defined as:

1. the usual credit-card discount fees that are waived (and therefore, not paid) when a previously negotiated level (or floor) of sales has been reached or exceeded
2. the unexpected amount that is recovered by the merchant/hotel from reimbursed credit-card accounts that were originally treated as chargebacks
3. the value earned during the period that cash or commercial papers are in the process of transfer between different financial interests; say, the credit-card company and the cardholder
4. the amount of fees earned for the use of debit cards when the debit card discount fees are greater than the credit-card discount fee
5. none of the above

8. As regards the management of bad debts,

1. collection agencies are permitted by law to be far more aggressive than the hotel in pursuing deadbeats who refuse to pay legitimate claims
2. the longer the debt is unpaid, the greater the possibility of collecting so credit managers usually delay major collection efforts for at least 180 days
3. collection agencies may take as much as 30% to 40% of the amount collected
4. collection agencies are very effective: they bring settlement to between 95% and 100% of the accounts turned over to them
5. all of the above except b

9. To help keep a sharp credit watch on guests who arrive without reservations, the desk flags them with which of the following symbols:

1. WI
2. NR
3. OS
4. TA
5. all of the above except d

10. Travel agencies:

1. have a strong love-hate relationship with hotel operators
2. collect a commission of between 20% and 25% of the room rate charges paid by the guest
3. collect higher commissions -- up to 30% from airlines, by booking heavy volume with one particular line that then pays override commissions as incentive to reach that volume
4. are always accounts receivable with the hotel, never accounts payable
5. both a and d

11. Consumer credit cards fall into one of three broad categories. These are:

1. Bank cards, Chargex or MasterCard
2. Chargex, Visa or MasterCard
3. American Express, Bank cards and debit cards
4. Debit cards, American Express and Diners Club
5. Bank cards, Travel & Entertainment cards (T&Es) and Private label cards

12. When discussing credit cards the term float is often mentioned. This is:

1. the amount of credit an individual has available on a credit card
2. the amount of unused credit available on a credit card
3. if you have a credit card and charge something on the 1^st day of the new statement period you may have 21 to 29 days before interest charges accrue on that charge. This time period is called float
4. the amount of total credit any one individual may have available on all of their credit cards
5. float is a term that only applies to the cash float at the front desk and is not a term used when talking about credit cards

13. When it comes to late charges on a guest folio, which of the following is true?

1. Late charges are easy to collect
2. Late charges are not posted to the guests account and are just written off because the guest has already checked out
3. If a hotel has an effective late charges procedure the amount of late charges can be greatly reduced
4. Small late charges say $15.00 or less may be written off as the cost of collection is too high
5. Both c and d are correct

14. When discussing how most hotels handle banquet charges today which of the following is true?

1. At the end of the banquet it is common for the hotel to have the guest sign the banquet check and then the guest is invoiced
2. Banquets always have established credit because the guest has signed a banquet event order so invoicing is never a problem
3. Both a and b are correct
4. Normally payment in full is required by credit card prior to the banquet being held
5. None of the above are correct

15. Hotels often trade room nights for products from suppliers. The correct term for this type of transaction is:

1. Due bill
2. Contra account
3. Trade advertising contract
4. Reciprocal trade agreement
5. all of the above terms are used when describing this type of transaction

Short Answer Question. Answer briefly using a short paragraph or exhibit as appropriate:

16. List three things that a cashier should do or watch for when accepting credit cards. List three things that a cashier should not do when accepting credit cards.