About the Authors iii Preface ix 1 Hospitality Industry Accounting 1 Unique Aspects of the Hospitality Industry 1 The Purpose of Accounting in the Hospitality Industry 3 Branches of Accounting 5 Why Hospitality Managers Use Managerial Accounting 11 The Uniform System of Accounts 13 Ethics and Hospitality Accounting 15 Apply What You Have Learned 19 Key Terms and Concepts 20 Test Your Skills 20 2 Accounting Fundamentals Review 24 Bookkeeping and Accounting 24 The Accounting Equation 26 Recording Changes to the Accounting Equation 27 Generally Accepted Accounting Principles 37 The Hospitality Business Cycle 48 Apply What You Have Learned 52 Key Terms and Concepts 52 Test Your Skills 53 3 The Income Statement 58 The Purpose of the Income Statement 58 Income Statement Preparation 63 Income Statement Analysis 83 Apply What You Have Learned 104 Key Terms and Concepts 104 Test Your Skills 105 4 The Balance Sheet 113 The Purpose of a Balance Sheet 113 Balance Sheet Formats 119 Components of the Balance Sheet 126 Balance Sheet Analysis 138 Apply What You Have Learned 144 Key Terms and Concepts 145 Test Your Skills 145 5 The Statement of Cash Flows 156 Understanding Cash Flows 157 The Purpose of the Statement of Cash Flows (SCF) 158 Sources and Uses of Funds 160 Creating the Statement of Cash Flows 167 Statement of Cash Flows Analysis 182 Apply What You Have Learned 185 Key Terms and Concepts 186 Test Your Skills 186 6 Ratio Analysis 196 Purpose and Value of Ratios 197 Types of Ratios 200 Comparative Analysis of Ratios 243 Ratio Analysis Limitations 245 Apply What You Have Learned 247 Key Terms and Concepts 247 Test Your Skills 248 7 Food and Beverage Pricing 258 Factors Affecting Menu Pricing 258 Assigning Menu Prices 262 Menu Price Analysis 269 Apply What You Have Learned 287 Key Terms and Concepts 287 Test Your Skills 288 8 Budgeting and Internal Controls 402 Importance of Budgets 403 Types of Budgets 405 Operations Budget Essentials 408 Developing an Operations Budget 409 Monitoring an Operations Budget 417 Cash Budgeting 427 Managing Budgets through Internal Control 434 Apply What You Have Learned 439 Key Terms and Concepts 440 Test Your Skills 440 9 Forecasting in the Hospitality Industry 373 The Importance of Accurate Forecasts 374 Forecast Methodology 376 Utilizing Trend Lines in Forecasting 393 Apply What You Have Learned 396 Key Terms and Concepts 397 Test Your Skills 397 10 Managerial Accounting for Costs 334 The Concept of Cost 334 Types of Costs 336 Cost/Volume/Profit Analysis 354 Apply What You Have Learned 362 Key Terms and Concepts 363 Test Your Skills 363 11 Revenue Management for Hotels 294 Establishing Room Rates 294 Revenue Management 307 Non-Room Revenue 320 Apply What You Have Learned 324 Key Terms and Concepts 324 Test Your Skills 325 12 Capital Investment, Leasing, and Taxation 450 Capital Budgeting 451 Capital Investment 454 Financing Alternatives 467 Taxation 475 Apply What You Have Learned 483 Key Terms and Concepts 484 Test Your Skills 484 Index 493.