NEW YORK CITY COLLEGE OF TECHNOLOGY, CUNY
DEPARTMENT OF HOSPITALITY MANAGEMENT
COURSE OUTLINE
COURSE: HMGT 3602
COURSE TITLE: HOSPITALITY MANAGEMENT
ACCOUNTING AND FINANCE
CLASS HOURS: 3
LAB HOURS: 0
CREDITS: 3
1. COURSE DESCRIPTION
The needs of management and the application of accounting concepts to managerial and
financial decision making, methods, and planning; analysis of financial statements, preparing
operating and capital budget analysis; principles, and techniques for managing cash reserves, and
other ethical and current management accounting and financial management issues.
2. COURSE OBJECTIVES
Upon completion of HMGT 3602, the student will be able to
a. Describe the major accounting categories on the statement of income, the balance sheet,
and statement of retained earnings.
b. Apply and interpret management and financial accounting information from financial
statements
c. Distinguish direct and indirect costs, fixed, and variable costs, and discretionary costs as
found in hospitality businesses
d. Utilize Cost Volume Profit analysis to calculate break even point as well as examine the
effect of cost and price changes
e. Explain budgeting process management
3. STUDENT LEARNING OUTCOMES and ASSESSMENT
Student Learning Outcomes
a. Articulate management and financial
accounting information communicated via
financial statements and reports (HMGT:
Knowledge, Gen Ed: Skills, Inquiry/Analysis)
b. Develop and evaluate comparative financial
statements (HMGT: Knowledge, Gen Ed:
Skills, Inquiry/Analysis)
c. Identify and interpret various costs found in
hospitality businesses (HMGT: Knowledge,
Gen Ed: Skills, Inquiry/Analysis)
d. Construct and assess Cost Volume Profit
analysis (HMGT: Knowledge, Gen Ed: Skills,
Inquiry/Analysis)
e. Organize a budget and justify the operational
budgeting processes (HMGT: Knowledge, Gen
Ed: Skills, Inquiry/Analysis)
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Method of Assessment
Homework, case studies, quizzes, and exams
Homework, case studies, quizzes, and exams
Homework, case studies, quizzes, and exams
Homework, case studies, quizzes, and exams
Homework, case studies, quizzes, and exams
4. PREREQUISITES
HMGT 2302
5. TEXT
Jagels, M. G. (2007). Hospitality management accounting (9th ed.). Hoboken, NJ: John Wiley &
Sons, Inc.
6. GRADING SYSTEM
Quizzes
Homework and Case Studies
Midterm Exam
Final Exam
Total
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25 %
30 %
15 %
30 %
100%
WEEKLY COURSE OUTLINE
COURSE: HMGT 3602
COURSE TITLE: HOSPITALITY MANAGEMENT
ACCOUNTING AND FINANCE
WEEK 1
Review of accounting
The rules of accounting
The balance sheet
Accounts and the accounting cycle
WEEK 2
Understanding financial statements
The income statement
The balance sheet
WEEK 3
Analysis and interpretation of financial statements
Comparative balance sheets and common-size balance sheets
Comparative income statements and common-size income statements
Average check, cost, and income per guest
Trend results
WEEK 4
Ratio analysis
Current liquidity ratios
Long-term solvency ratios
Profitability ratios
Turnover ratios
Operating ratios
Leverage
WEEK 5
Midterm exam
WEEK 6
Bottom-up approach to pricing
Restaurant pricing
Room rates
Room rate discounting
WEEK 7
Cost management
Types of costs
Allocating indirect cost to revenue areas
Which piece of equipment to buy
Selling below cost
Closing during off-season
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WEEK 8
Cost-volume-profit approach to decisions
Assumptions and limitations
Graphical presentation
The CVP formula
WEEK 9
Budgeting
Type of budgets
Budget preparation and budget cycle
Departmental budgets
Budgeting in a new operation
WEEK 10
Working capital
Statement of source and use of working capital
Usefulness of statement
Compilation of statement of source and use of working capital
WEEK 11
Cash management
The cycle of cash flow
Income and expense budgets
Preparing the cash budget
Long-range cash flow
WEEK 12
Investment decision
Average rate of return
Payback period
Discounted cash flow
Net present value
Internal rate of return
Own or lease equipment
WEEK 13
Financial goals and information systems
Objectives of financial management
Information systems
WEEK 14
Feasibility studies
Twelve-month average occupancy rate
Growth rate of demand
Additional room requirements
Future supply of room requirements
Calculations of: capital investment, pro forma statements, cash flow projections, property
evaluation
WEEK 15
Final examination
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WEEKLY COURSE OBJECTIVES
COURSE: HMGT 3602
COURSE TITLE: HOSPITALITY MANAGEMENT
ACCOUNTING AND FINANCE
The student will be able to . . .
WEEK 1
Define and discuss the key accounting principles and concepts
List the four methods of depreciation illustrated in the text
Explain the balance sheet equation
Post transactions to T - accounts
Complete working papers
WEEK 2
Explain the main purpose of financial statements and the value of a uniform system of accounts
Define and explain the difference between and income statement and a balance sheet
Describe the difference between direct and indirect or undistributed expenses, and give
examples
Prepare income statements in proper format, calculate net food cost, and discuss the concept of
responsibility accounting
List the six major classifications of accounts that could appear on a balance sheet and give
examples of the type of accounts that could appear in each classification
Prepare a balance sheet according to account category
WEEK 3
Describe comparative analysis and use it for balance sheet and income statement analysis
Describe comparative common-size analysis and use it for balance sheet and income statement
analysis
Calculate average sale, average cost, and average income per quest
WEEK 4
Describe the four ways in which a ratio can be expressed
Briefly explain and use each of the ratios illustrated
Interpret the results after using each of the ratios, stating how a creditor, an owner, and
management may view it from each of their perspectives
Differentiate between net income and profitability
List and briefly describe the use of some of the various operating ratios common to the
hospitality industry
Explain how leverage works in financing
WEEK 5
Pass midterm exam
WEEK 6
Briefly define and give examples of some of the major types of cost such as direct and indirect
costs, fixed and variable costs, and discretionary costs
Prorate indirect costs to revenue departments and make decisions on the results
Use relevant costs to help determine and make decisions, such as to close or not during the offseason
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Define "high operating leverage" and explain its advantages and disadvantages
WEEK 7
Briefly define some of the assumptions and limitations inherent in CVP analysis.
Prepare and use a graph, given information about sales and fixed and variable costs
WEEK 8
State the CVP equation for determining sales level in dollars, and in units.
Explain the term contribution margin
WEEK 9
Explain the concept of budgeting.
Define the three purposes of budgeting
Define the types of budgets, such as fixed, departmental, capital, and flexible.
Briefly discuss the advantages and disadvantages of budgeting.
Explain what information is required to determine budget revenue in a restaurant operation, and
budget revenue in the rooms department of a hotel or motel.
Prepare a budget (pro forma) income statement given appropriate information about estimated
revenue and costs
WEEK 10
Define working capital.
List and briefly explain some of the source and some of the use of working capital.
Prepare a statement of source and use of working capital, given appropriate information.
Prepare a statement of changes in working capital, given appropriate information.
Explain why net income and cash on hand are not necessarily synonymous
WEEK 11
Explain why cash planning is necessary and state the two main purposes of cash budgeting
Explain why net income on an income statement is not necessarily indicative of the amount of
cash on hand
Prepare cash budget given appropriate information.
Define bank float
Prepare a schedule of aging of account receivable
Calculate inventory turnover
WEEK 12
Explain how average rate of return is calculated, using the ROI equation
Explain the major advantages and disadvantages of using average rate of return
Give the equation for the payback period, use the equation, and state the pros and cons of this
method
Discuss the concept of the time value of money, and explain the term "discounted cash flow"
Use discounted cash flow tables in conjunction with net present value method to make
investment decisions
Solve problems relating to the purchase verses the rental of fixed assets
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WEEK 13
Discuss the role of mission statements with reference to financial goals.
Discuss the concepts of financial management and list the types of financial and other goals that
a company might have.
Discuss the pros and cons of wealth maximization as a financial goal.
Define Management by objective.
Define management by exception
WEEK 14
Discuss "Feasibility Studies"
Discuss the value of a feasibility study
List and briefly discuss the four steps in hotel room supply and demand analysis
Calculate forecast rooms requirements from demand information
Prepare pro forma income statements for room, food, and beverages from given information.
Convert pro forma income statements to cash flow
Evaluate the financial analysis projections of feasibility studies
WEEK 15
Pass final examination
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applications and competitive advantage in hotel companies. Journal of Hospitality and
Tourism Technology, 2(2), 139-153.
Choo, F., & Tan, K. B. (2011). An income statement teaching approach for cost-volume-profit
(CVP) analysis by using a company’s CVP model. Accounting and Finance, 11(4), 2336.
Corgel, J., & Woodworth, M. (2012). Why hotels? Economy weakens but hotels remain
relatively strong--- What gives? What might give? Cornell Hospitality Quarterly, 53(4),
270-273.
Chouliaras, V. (2012). Analyzing income statement of 3 star hotel in Thessaloniki. Tourism and
Hospitality Management, 18(1), 83-93.
Edwards, J. S. A., & Ingram, H. (1995). Food, beverage and accommodation: An integrated
approach. International Journal of Contemporary Hospitality Management, 7(5), 24-29.
How to study and write for accounting (2012). Retrieved 2012, from http://tinyurl.com/yjwmq4
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Contemporary Hospitality Management, 20(4), 428-444.
Mihailovi, I., Randelovic, D., & Stojanovic, D. (2010). Accounting information as resource for
business decisioning. Tourism & Hospitality Management, 1067-1074.
Rutgers Accounting Web (2012). Retrieved 2012, from http://tinyurl.com/yjymo5
Schmidgall, R. S., Borchgrevink, C.P., & Zahl-Begnum, O.H. (1996). Operations budgeting
practices of lodging firms in the United States and Scandinavia. International Journal of
Hospitality Management, 15(2), 189-203.
Turner, M. J., & Guilding, C. (2010). Accounting for the furniture, fittings & equipment reserve
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