Pearson New International Edition International pcl tp indd 1

Bookkeeping and Accounting
Accounting is the process of summarizing and reporting financial transactions. Most
of the financial reporting tasks completed at the front desk, however, involve book-
keeping rather than accounting. Bookkeeping involves the initial recording of finan-
cial transactions.
FRONT OFFICE SEMANTICS
Bookkeeping:
Process of initially recording financial transactions.
Bookkeeping output yields data used by accountants. For example, the recording
of an individual financial transaction such as an in-room movie sale is a bookkeeping
task. The FOM tallies the total revenue generated from movie sales during the month,
and this information is incorporated into the hotel’s monthly financial statements,
which are analyzed by the controller, general manager, and others. If improper book-
keeping is done (e.g., movie sales are not recorded properly), the resulting financial
data will be inaccurate. Then decisions made based on the “numbers” supplied by the
FOM may be flawed. As seen in Figure 1, bookkeeping forms the foundation of
Financial
Analysis
Summary
Accounting
Bookkeeping
FIGURE 1
Financial management begins with bookkeeping.
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financial management. It is not possible to effectively analyze a hotel’s financial stand-
ing if the data summarized are erroneously or carelessly generated by those perform-
ing bookkeeping tasks.
The accounting process is based on the fundamental accounting formula shown
in Figure 2. Assets refer to everything owned by the hotel.