Deck 7: Financial Control and the Accounting Department

Question 1

According to the generally accepted accounting principles (GAAP), the full disclosure principle of accounting is ___________.

A) the requirement that the financial statement should provide all information necessary for the understanding of the financial statement
B) the assumption that the accounting entity will maintain proper accounting records from the date of its establishment to the date of its liquidation
C) the requirement that events or information must be accounted for if they make a difference to the user of the financial information
D) the requirement that all accounting transactions should be justified as much as possible on objective evidence

Answer 1

A

Question 2

The generally accepted accounting principle that supports recording the value of a property at the purchase price when the market value is higher is the___________.

A) cost principle
B) conservatism principle
C) going concern principle
D) monetary unit principle

Answer 2

A

Question 3

The generally accepted accounting principle that indicates that accounting and financial statements are based on the concept that each business maintains its own set of accounts and that these accounts are separate from those of the owners is the ______________.

A) business entity principle
B) separate concern principle
C) consistency principle
D) conservatism principle

Answer 3

A

Question 4

The generally accepted accounting principle that indicates that once an accounting method has been chosen by management, this should be used from period to period unless a change is necessary and this change must be disclosed is the _______________.

A) consistency principle
B) time period principle
C) conservatism principle
D) matching principle

Question 5

According to the generally accepted accounting principles, the conservatism principle is the ______________.

A) requirement that expenses should be recognised as soon as possible whereas revenues should be recognised only when they are verified.
B) requirement that expenses should be related to their revenues
C) requirement that all accounting transactions should be justified as much as possible on objective evidence
D) requirement that the financial statements should be based on transactions expressed in the primary monetary unit of the area

Question 6

The generally accepted accounting principle that indicates that events or information must be accounted for if they make a difference to the user of the financial information is the _____________.

A) materiality principle
B) objectivity principle
C) full disclosure principle
D) matching principle

Question 7

The generally accepted accounting principle that indicates that revenues are only recognised when they are earned is the __________.

A) realisation principle
B) recognition principle
C) objectivity principle
D) matching principle

Question 8

The Green Hotel bought some kitchen equipment at € 18,000.00. The producers had initially informed them that the value was really € 21,500.00. It is expected that the equipment will have a market value of € 16,500.00 in six months.Based on the cost principle of the GAAP, what should be the recorded value of the kitchen equipment in the books of the Green Hotel on the purchase date?

A) € 18,000.00
B) € 21,500.00
C) € 16,500.00
D) € 18,000.00 less any possible salvage value

Question 9

Which option contains the four major business values contained in the various branches of accounting?

A) Planning, communicating, controlling, and determining profit
B) Planning, coordinating, controlling, and determining profit
C) Planning, communicating, coordinating, and implementing
D) Planning, communicating, controlling, and implementing

Question 10

Which one of the following activities DOES NOT form part of the main purpose of budgeting?

A) Supervision
B) Communication
C) Coordination
D) Evaluation

Question 11

Which of the following items WILL NOT be shown in the balance sheet of a hotel?

A) customer loyalty value
B) accounts payable
C) accrued taxes
D) intangible assets

Question 12

Which section of the balance sheet generally changes with the type of company?

A) The owners' equity section
B) The assets section
C) The current liabilities section
D) The long term liabilities section

Question 13

Which of the following questions CANNOT be answered when analysing the information presented in an income statement?

A) What was the cash balance at the end of the period?
B) How much was spent to pay salaries during the period?
C) What was the profit for the period?
D) What were the sales for the period?

Question 14

What a hospitality organisation generates from activities, other than its primary business activity, will be shown in its income statement as _______.

A) gains
B) expenses
C) losses
D) revenues

Question 15

Which of the following stakeholders will consider using a company's cash flow statement to assess its ability to generate enough cash from its operations?

A) Creditors, investors, and suppliers
B) Creditors and investors only
C) Investors and suppliers only
D) Suppliers and creditors only

Question 16

A hotel's beginning retained earnings were € 70,000.00. In the course of the year, it had a net loss of € 14,000.00, and paid out dividends of € 8,000.00.What will be the hotel's ending level of retained earnings?

A) € 48,000.00
B) € 64,000.00
C) € 92,000.00
D) € 76,000.00

Question 17

A hospitality operation's daily routines generate a vast amount of data, which are indicated in various reports.What is the name of the report that provides an overview of all revenues and payments for individual accounts over a selected period of time?

A) The accounting report
B) The hotel status report
C) The movement report
D) The revenue report

Question 18

Which section within a hotel is principally responsible for managing guest accounts?

A) The Front Office
B) The Finance Office
C) The Accounts Office
D) The Credit Office

Question 19

There are three basic objectives of a good accounting system within a hotel.Which option below IS NOT one of the objectives of a good accounting system?

A) Ensuring salaries and wages are in line with financial performance
B) Maintaining accurate and up-to-date guest accounts
C) Ensuring payments are received in full and as promptly as possible
D) Providing management with accurate and up-to-date financial reports

Question 20

Within a hotel, the verification of the accuracy of transactions is called_______.

A) auditing
B) accounting
C) bookkeeping
D) posting