1) Introduction of Tours and Travels Businesses :-

Tours and travels businesses are enterprises that offer travel-related services to
individuals and groups. These businesses provide a wide range of services such as
transportation, accommodation, tour packages, and other travel-related activities to their
customers.

The introduction of modern tourism in the 19th century led to the emergence of the tours
and travels industry, which has since become a significant contributor to the global
economy. The industry has grown rapidly over the years, driven by factors such as
advancements in transportation, communication, and technology, as well as increasing
consumer demand for travel experiences.

Tours and travels businesses have played a crucial role in shaping the way people travel
today. They offer a wide range of services and products that cater to different travel
needs, preferences, and budgets. With the advent of digital technologies, tours and travels
businesses have also evolved to provide online booking systems, mobile apps, and other
digital platforms to make travel more accessible and convenient for customers.

Overall, tours and travels businesses have become an essential part of the travel industry,
providing a gateway to new destinations, cultures, and experiences for millions of people
around the world.

Coasting and Pricing a Package Tour:-

The cost of a package tour encompasses the air ticket, the hotel room, car rental,
entertainment charges, administrative costs, promotional costs, and other travel services. The
confidential tariff helps the travel company in preparing the cost sheet which will enable the
concern to determine its price strategy.

Tour pricing is a big factor in the success of the company’s tour programme. The price of a
package tour is, whether it is an escorted, independent or hosted the tour, often lower than the
combined costs of the same components purchased separately from the principals. However,
the purchase price of a travel product is based on three factors: Cost, competition, and
demand.

Every tour package sold by a vendor has a quantifiable cost. To produce profit the price paid
by the tourists must be greater than the agency’s cost.
Tours and Travel Agency Accounting:-

The basic objective of accounting is to ascertain the profitability and finance position of a
travel agency operation. To achieve this, every travel agency prepares the following journals
and statements:

 Sales Journal
 Cash Receipt
 Account Receivable
 Cash Disbursement
 IATA ledger
 Pay Roll
 General Ledger
 Profit and Loss Account
 Balance Sheet

Sale Journal
In this journal, all credit sales are recorded. Sometimes, a travel agency provides extends
credit facilities to its clients i.e., leisure and commercial clients. It, in fact, makes a cash loan
to its clients. However, it has been noticed that only large-scale travel agencies can afford to
extend credit to corporate customers, but even then, a thorough credit check is required
before a credit amount is opened.

To maintain the up-to-date record of all credit sale, travel company prepare a sales journal.

Cash Receipt Journal

It is used to record all revenues received by the travel agency during the period. In other
words, transactions concerning cash, credit cards, cheques are recorded in this journal. For
example sale of the tour package, the commission received from the hotel, airlines and other
vendors are recorded in it.

Account Receivable
When a travel agency purchases tourism products, services from the supplier on credit, the amount
owed to producers/suppliers/sellers are referred to as an account receivable.

Cash Disbursement
Cash outflows are recorded in cash disbursement journal. Cash outflow means the operating
expenses of the travel agency like rent, salaries, telephone expenses, administrative expense,
financial and legal expenses, selling and distribution expenses etc.
These are mostly paid by cheques or through bank drafts. Cash disbursement journal is also
called Cost Journal. Thus, cost journal is used to record the payments made by a travel
company to its employees and others.

IATA Ledger
The IATA ledger is known as ‘Chief Book of Accounts’ and is the destination point of
entries made in the journals or sub-journals. It is used to balance the accounts of the travel
agency. In accounting, ‘Balance Account’ means continuous and consistent check and
verification of the accuracy of a travel agency’s accounting system.

research methodology of Tours and travels businesses:-

The research methodology for studying tours and travels businesses typically involves a
combination of primary and secondary research methods.

1. Primary research involves collecting data directly from the source, such as through
surveys, interviews, and focus groups. In the case of tours and travels businesses,
primary research may involve conducting surveys of customers to understand their
travel preferences, expectations, and satisfaction levels. It may also involve
conducting interviews with industry experts, tour operators, travel agents, and other
stakeholders to gain insights into industry trends, challenges, and opportunities.

This project report is completely depends on the secondary data.

2. Secondary research involves analyzing existing data from published sources such as
government reports, industry journals, market research reports, and online databases.
In the case of tours and travels businesses, secondary research may involve analyzing
data on industry size, growth rates, consumer behavior, and competitive landscape.

Secondary source of data collection provide most important information or

data for the purpose of study project report.
2) History of Tours and Travels Businesses :-
The history of tours and travel businesses can be traced back to ancient times, where
people would travel for various reasons such as trade, religious pilgrimages, exploration,
and cultural exchange. However, the concept of modern tourism began to take shape in
the 19th century with the advent of mass transportation and improved communication
systems.

The first tour operator in the world is believed to be Thomas Cook, who started his
business in 1841 when he arranged a train journey for a group of temperance campaigners
in England. This marked the beginning of the organized travel industry, and Cook went
on to organize a series of successful tours throughout Europe, America, and the Middle
East.

In the early 20th century, the introduction of automobiles and the expansion of air travel
opened up new opportunities for the travel industry. Tour operators began to offer
package tours, where customers could purchase a complete travel experience that
included transportation, accommodation, and sightseeing activities.

The travel industry continued to grow rapidly throughout the 20th century, with the
development of new technologies such as jet aircraft, the internet, and online booking
systems. The rise of budget airlines and low-cost carriers in the 1990s and 2000s also
contributed to the expansion of the travel industry, making travel more accessible to
people from all walks of life.

Today, the travel industry is a global enterprise that generates trillions of dollars in
revenue each year. The industry has diversified to include a wide range of services, from
adventure travel and luxury vacations to business travel and medical tourism. With the
ongoing advancements in technology and globalization, the travel industry is expected to
continue to evolve and expand in the years to come.
Review Questions :
1. Explain the historical background of travel industry.
2. How Thomas Cook played a key role in evolution of travel business.
3. Activity: Recall your last educational study tour.
4. Write one page details of your study tour.
Methods of accounting adapted by tours and travel businesses:-

Tours and travel businesses use various methods of accounting to

manage their financial records and keep track of their income,
expenses, and profits. Some of the commonly adapted methods of
accounting by tours and travel businesses are:

1. Cash basis accounting: This is the simplest method of

accounting, where the business records its transactions when
cash is received or paid. This method is suitable for small tours
and travel businesses that do not have a complex financial
structure.
2. Accrual basis accounting: In this method, revenue and expenses
are recorded when they are incurred, regardless of whether
cash has been exchanged. This method is more accurate in
reflecting the financial performance of the business but
requires more effort and record-keeping.
3. Double-entry bookkeeping: This method involves recording
every transaction in two accounts, such as a debit and a credit.
This method ensures that the accounts are always balanced
and provides a clear picture of the financial health of the
business.
4. Online accounting software: Tours and travel businesses can
use online accounting software to manage their financial
records more efficiently. These software programs can
automate many accounting tasks, such as invoicing, expense
tracking, and tax preparation.
5. Job costing: This method is used to track the costs associated
with specific tours or travel services. It helps businesses to
determine the profitability of individual tours or travel services.
6. Budgeting and forecasting: Tours and travel businesses can use
budgeting and forecasting tools to estimate future income and
expenses, which can help them to plan for growth and make
informed financial decisions.
Overall, the method of accounting used by tours and travel
businesses will depend on the size of the business, the complexity of
its financial structure, and the specific needs of the business.

Statement of Problem:-

One of the main problems with the methods of accounting adapted by tours and
travel businesses is the complexity of their financial structures. Tours and travel
businesses often have multiple revenue streams, such as ticket sales, tour
packages, and travel accommodations. These revenue streams can be difficult to
track and record accurately, especially when they involve different currencies,
taxes, and fees.

Another problem is the difficulty in tracking expenses, particularly when they

involve multiple vendors, suppliers, and service providers. Travel businesses
may incur expenses such as fuel costs, maintenance, and repairs, which can be
challenging to record accurately and allocate to specific tours or travel services.

Additionally, tours and travel businesses may face challenges in maintaining

accurate inventory records, particularly if they offer a variety of travel services
and packages. This can make it difficult to determine the cost of goods sold and
calculate profitability.

Finally, tours and travel businesses may need to adapt their accounting methods
to comply with changing tax regulations and reporting requirements, which can
be time-consuming and complex.

Overall, the complex financial structures and unique accounting needs of tours
and travel businesses can make it challenging to maintain accurate and up-to-
date financial records.
Selection of Subject:-

1) The subject of methods of accounting adapted by tours and

travel businesses is relevant and important because tours and
travel businesses operate in a unique financial environment
that requires specialized accounting methods.
2) The unique accounting needs of tours and travel businesses
require specialized knowledge and expertise, and studying this
subject can help professionals and academics to develop a
better understanding of the challenges and opportunities in
this industry.

Objectives of Study:-

1. To provide an overview of the different accounting systems and

methods utilized by tour and travel businesses.
2. To examine the advantages and disadvantages of each accounting
system used by tour and travel businesses.
3. To explore the factors that influence the choice of accounting
system by tour and travel businesses.
4. To investigate the role of technology in accounting and how it has
influenced the accounting practices of tour and travel businesses.
5. To analyze the financial statements of a sample of tour and travel
businesses and compare the different accounting systems used.
6. To provide insights and recommendations for tour and travel
businesses on how to improve their accounting systems.
7. To contribute to the existing literature on accounting practices in
the tourism industry.

Scope:-
1. The scope of the study of methods of accounting adapted by tours and travel
businesses includes the examination of the various accounting methods used by
these businesses to manage their financial records.

2. This study may explore the unique financial structures of tours and travel businesses
and the challenges they face in maintaining accurate financial records.

3. The study may also delve into specific accounting issues that affect tours and travel
businesses, such as foreign currency transactions, revenue recognition, and
inventory management.
 Limitations:-
1. Complexity: Tours and travel businesses have complex
financial structures that involve multiple revenue streams,
expenses, and inventory records. As a result, accounting
for these businesses can be time-consuming, and
mistakes can be costly.

2. Currency fluctuations: Tours and travel businesses often

deal with foreign currencies, which can be volatile and
affect the accuracy of financial reporting.

3. Seasonality: The seasonality of the travel industry can

make it challenging to accurately track revenue and
expenses throughout the year, particularly during peak
travel periods.

4. Tax regulations: Tours and travel businesses are subject to

tax regulations that can be complex and vary by
jurisdiction. Keeping up with changing tax regulations can
be challenging and require specialized knowledge and
expertise.

1. Defining the research problem: The first step is to clearly define the research problem,
which in this case is to study the accounting systems used by Tours and Travel
businesses.
2. Developing research questions and hypotheses: Based on the research problem, a set
of research questions and hypotheses are developed to guide the research process. For
example, some questions could include: What are the most commonly used
accounting methods in Tours and Travel businesses? What are the advantages and
disadvantages of these methods? How do these methods impact financial reporting
and decision-making?
3. Conducting a literature review: A literature review is conducted to gather information
on existing research and literature on the topic of accounting systems in Tours and
Travel businesses. This helps to identify any gaps in the existing research and informs
the development of research questions and hypotheses.
4. Selecting a research design: A research design is selected based on the research
questions and hypotheses, and the nature of the data to be collected. For example, a
 survey or questionnaire could be used to gather data from Tours and Travel
businesses on their accounting practices, or a case study approach could be used to
analyze the accounting systems of a few selected Tours and Travel businesses in-
depth.
5. Collecting and analyzing data: Data is collected using the chosen research design, and
analyzed to identify patterns and trends in the accounting systems used by Tours and
Travel businesses. This could involve using statistical analysis tools to quantify the
data and identify correlations and associations between different variables.
6. Interpreting and reporting findings: The final step is to interpret the findings of the
research and report them in a clear and concise manner. This involves summarizing
the key findings, drawing conclusions, and making recommendations for future
research or for improving accounting practices in Tours and Travel businesses.