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Hospitality Accounting Question Paper

Hospitality Accounting

Course:Master Of Science In Hospitality Management

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
INSTITUTE OF OPEN LEARNING (IOL)
UNIVERSITY EXAMINATIONS 2007/2008
EXAMINATION FOR THE DEGREE OF MASTER OF SCIENCE (HOSPITALITY MANAGEMENT)
HIM 501: HOSPITALITY ACCOUNTING

DATE: MONDAY, 7TH JANUARY 2008 TIME: 9.00 A.M. – 12.00 P.M.

INSTRUCTIONS:
Answer ALL questions in Section A and B. Answer only ONE (1) question in Section
C. All monetary value is in Kenya Shillings.

SECTION A
QUESTION ONE
a) Explain the concept of depreciation and give two depreciation methods. How are the values posted in the ledger.
b) Suppliers are interested in the current ratio of hospitality firm before accepting their LPOs. Explain their concern.
c) Urgent purchasing of kitchen raw material for preparing lunch is required. There is no petty cash available but the Chief Cashier is holding the night’s sales collection. He has refused to release any of the collection and insists that he needs to Bank it all before he withdraws the petty cash. Explain to the Food and Beverage Manager why this is necessary.

SECTION B
QUESTION TWO
In January 2007 Hotel Kusinyi purchased the following wines:

2nd Jan : Purchased 12 bots Naivasha @ 120.00

16th Jan: Purchased 12 bots Naivasha @ 130.00

31st Jan: Sold 18 units (bots) @ 260.00 each
a) Determine the inventory value at the end of Jan and cost of sales.
1) Using FIFO method
2) Using the LIFO method
3) Weighted average

b) A hotel with three divisions reported the revenues for each division. Determine the percentages of revenue provided by each division from the following:
Rooms division 1,269,008
Food service division 878,544
Beverage division 292,848
Total Revenue 2,440,400

SECTION C
Answer only ONE (1) question form this Section.

QUESTION ONE
John Katumanga has sent his Balance Sheet to you for advice. You observe the
information for the last 2 successive years as follows:
Total assets Total liabilities Total stockholders equity

Year 006 411,200 302,400 108,800

Year 007 395,700 315,500 80,200

I) You have decided to analyze the balance sheet using the following ratios:
a) Total assets to total liability ratio
b) Total liabilities to total asset ratio
c) Total liabilities to total ownership equity

II) Calculate the above ratios and discuss the changes that have taken place over the 2 year period from the view point of an investor who has been asked to loan the hotel money for expansion.

QUESTION TWO
Hassan runs a restaurant at Eastleagh that has 3 revenue divisions. He is considering
closing some divisions. His average monthly figures are as follows:

Revenue Cost of Sales Wages/salaries Other direct costs
Dining Room 208,000 83,200 66,560 16,640

Banquet Room 112,000 33,600 24,640 8,960

Beverages 80,000 28,000 12,000 1,600

The Restaurant has the following indirect costs:
Administration 13,000
Marketing 9,000
Utilities expense 6,000
Maintenance 12,000
Depreciation expense 14,000
Insurance expense 2,000

a) Prepare a contributory income statement. Show each division side by side for comparison, allocate no indirect costs.

b) Allocate indirect costs to the division and prepare an income statement for each division. Administration and marketing are based allocated “based on revenue”, while the remaining indirect costs are “based on square footage” used by each division. Dining is 2400 Sq. ft., Banquet 3,00 Sq. ft and Beverage 600 Sq. ft.

c)Would you consider closing any of the divisions? If so tell Hassan why? If not state why?

Hospitality Accounting Question Paper

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