Pearson New International Edition International pcl tp indd 1

Section Summary:
FOMs do not need to be trained accountants, but they must
have a basic understanding of accounting principles as they relate to guest
charges and payments. In other words, they must be knowledgeable about front-
office accounting techniques.
Most of the work done by front office personnel involves bookkeeping, the
recording of financial transactions. Use of accepted rules of accounting ensures
that the fundamental accounting formula (assets = liabilities + owner’s equity) is
always maintained. In addition, use of an appropriate system to generate account-
ing information helps users of the data (e.g., owners, investors, creditors, and hotel
operators) to understand the hotel’s financial position.
FOMs are accountable for many financial management tasks such as creating
registered guest accounts, maintaining accounts used by nonregistered guests,
posting debits and credits to the appropriate accounts, recording payment infor-
mation, and implementing procedures to help ensure the accuracy and complete-
ness of the front-office accounting system. Information must be recorded properly
in the guest ledger or city ledger before being transferred to the hotel’s general
ledger. Modern PMSs make this task relatively easy for routine transactions.
Nevertheless, it is important to ensure that information entered into guest folios is
current and accurate. Most likely adjustment vouchers will be necessary in some
instances to compensate guests for operational shortcomings, posting errors, or
other problems.
When guests check out, their account balance must be reduced to zero, which
can be done easily if the payment is made by cash or check. The process becomes
more complicated when payment cards are used. Then the amount owed is trans-
ferred from a guest receivables account to a credit or debit card receivables
account. Alternatively, payment folio balance can be transferred to a direct bill
section of the city ledger or to a house account that will transfer charges to a hotel
entity such as the sales and marketing department.