This chapter discusses the accounting functions of a foodservice operation. A foodservice manager does not need to know accounting to its fullest extent as he/she would be capable of substituting a financial controller; instead, the manager only needs to have a broad and sound knowledge of the accounting department's activities. Therefore, this chapter will prepare the foodservice manager, mainly with the “managerial accounting branch” and less with the others. Accordingly, the chapter is titled “Managerial Accounting for Non-Accountants.”
TopLearning Objectives
After studying the chapter, the reader will be familiar with:
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Concept and understanding of accounting in general and foodservice specific
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The accounting department, its operational activities, and organization
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Financial responsibilities of the financial controller and the foodservice manager
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Definition of accounting and its scope in foodservice
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Branches of accounting
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Industry-specific accounting functions as they apply to a foodservice business
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Budgeting
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Forecasting
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Capital investment
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Purchasing
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Cost control
TopA. Introduction To Food And Beverage Service Accounting
Is there a difference between financial management and accounting management? This chapter discussed basic accounting principles about revenue management, business analysis, reporting, financial control, budgeting and forecasting principles, and more (David & Britton, 2004). The term finance may be defined as “the discipline of funds management,” in other words, the management of money capital. In practical business terms, a “fund” could be interpreted as the “means” to provide “funding” or monetary capital for a project, a person, a business, or any other private or public institution. Thus, finance is about a corporation's financial decisions, an individual, a public or private entity, including governments. The players face two basic financial questions in the daily economic environment: 1. what investments should be made? 2. How to pay for those investments? The secret of financial management success is to increase value for the entity.
The hospitality industry, in general, has always dealt with one of the most complex accounting systems. Because the hospitality industry has always been global, it had to create systems that could be widely understood and standardized. It strived to have one currency, common systems of measurement, evaluation, and records. What continues to be different from one country to another, to name some, is the tax and reporting system. The tax law, of course, influences the way records must be kept, the length of time, what kinds of records, and, to a certain extent, the profitability of a business. To make the hospitality accounting system more standardized and simplified, The Financial Hotel Association of New York City published 1926, the first edition of the Uniform System of Accounts For The Lodging Industry.