HOSPITALITY FINANCIAL ACCOUNTING AND CONTROL

Summary Activity

1. Why would you think Accounting is necessary for a Business?

In order to keep track of the financial and economic transactions that shape the
financial health of the business. These transactions will be categorized and
summarized too in the company financial statements. It is also necessary to make
business decisions.

2. Name an example of an internal and an example of an external user of the financial

accounting information.

Internal Users: Directors, Department Managers, employees who are authorized to use
financial information.
External Users: Creditors, Investors, Government, Market Analysts.

3. Economic resources owned by a business are referred to as: ASSETS.

4. LIABILITIES are Obligations of a business to others.

5. According to the accounting equation, assets equal liabilities plus: Owners’ Equity (or
Capital).

6. Resources used up in producing goods or services are referred to as: EXPENSES.

7. If revenue exceeds expenses, the difference is called: NET INCOME OR NET PROFIT.

8. Rent is an example of: AN EXPENSE.

9. Using the same accounting method over a period of years is referred to as the
CONSISTENCY principle.