Hospitality Management Accounting

PART A – True/False Statements. Indicate T (TRUE) or F (FALSE) alongside each question.

(12 marks)

1) T F The uniform system of accounts ensures that the financial statement

figures of an establishment conform to national average figures.

2) T F Direct expenses are generally controllable by, and thus the responsibility

of the department head.

3) T F A department with a high contributory income percent will, with an

increase in revenue, yield more net income to the overall establishment

than would the same revenue increase in a department with a low

contributory income percent.

4) T F A capital surplus is the amount by which the present market value of a

capital (or fixed) asset exceeds its original purchase cost.

5) T F The liability and owners’ equity sections of a balance sheet show how the

company’s assets are currently financed.

6) T F Comparison of periodic balance sheets is useful for controlling the day-

to-day operations of a business.

7) T F Comparative common-size income statements show how each expense

item as a percent of total revenue.

8) T F If a profit of $825 was made at a banquet and 750 guests were served,

average net income per guest would be $1.01.

9) T F An index trend for several periods usually assigns the current period

figure the value of 100.

10) T F Comparison of operating results in times of inflation can be done quite

easily without adjusting for the effects of inflation.

11) T F An establishment can use internally generated information to produce its

own series of index numbers.

12) T F Analysis