Accounting Procedure In Hotels



The hotel has its accounting system planned in such a way that it allows for all transactions to pass through the cashier (cash office) before getting to the accounts sections.  This is in the sense that all its receipts and disbursement are made by the cashier after which the cashier prepares a summary and accents to the accounts sections. 

It important to note also that all other sections of the hotel whose income are generated are accountable to the cashier.

The summary sheet used by the cashier has analytical columns to cover the various sections where funds are been generated.  This summary is further supported by another which show at a glance the amounts realized from any section or activity.  It is shown below.


Deposit                          –                  xx

Bar sale                          –                  xx

Restaurant sales             –                  xx

Telephone sales             –                  xx

Telex                              –                  xx

Other sales                     –                  xx


Less:  Impress xx

Refund  xx                               xx

Cash balance                           xx


Each of the sales in the cashier’s summary are also supported by documents and summaries (example bar summary, kitchen summary, etc.)

The cashier summary on getting to the accounts section, completion of work are done on the documents.  It is here that these documents are made ready for subsequence posting into the appropriate books of accounts.

On bringing the summarize from the cash office to the accounts departments, the accountant first goes through them.  After checking for irregularities and ensuring that each amount into the summary is appropriately backed with documents, they are then passed to accounting officers on accounts clerk.

Once the summary goes to the clerks, various clerical works will start. These includes, checking the cashier’s posting of guest consumption into their bills, checking the quantity of food or drinks sold against the register kept for this purpose, analyzing the sales into the appropriate income analysis for subsequent posting into the subsidiary books etc.

Analysis of sales

          As the item sold in the bar, restaurant, house keeping and having other section of different categories and each having its own account, they are summarized in summary sheet used in accounting for them before being transferred into the subsidiary books.  The sales in this bar, restaurant ,  house keeping are summarized under this analytical headings: Bar, Food, mineral, analytical headings: – Bar, Food, mineral Juice, Hot/wine, cigar, miscellaneous.  The net amount which is got after deducting the 5% state purchase tax from the gross amount is then read for posting into the receipt cash book.

From the hotel bill of guest are summarized, the accommodation, telex, telephone, laundry.  Most  cash receipt which did not pass through the summarize or hotel ills are summarized in the official receipt and posted into the cash book.

Posting into the subsidiary books.

          The subsidiary books are mainly concerned with the details in invoices and other documents relating to transactions.

The hotel keeps the receipts cash book (RCB) payment cash book (PCB), and the journal as its subsidiary books.

In the receipt cash book, receipts of the hotel are recorded daily, be it cash or credit.  It has any number of columns assigned to suit the particular requirement of the business and produces total for items of revenue which are taken to the credit of revenue account in the general ledger.  It is from the summarize prepared of the sales from kitchen, bar, house keeping, hotel bill and official receipts that entries are made into this receipt cash books.

Just as the receipt cash book takes care of the receipt, the payment cash book (PCB) is responsible for the expenditure/expenses of the hotel. It also has any number of  columns assigned to suit the particular requirement of the business and produces totals for items of expenditure which are taken to the debits of expenses account in the general ledger at the end of each month .

Also among he subsidiary books kept is the journal books. This book is important to firms as transaction which can pass through any other of the subsidiary books a re entered here before being transferred to the general ledger.


          Food and beverage costing in the hotel is based on the cost price of materials and the profit margin added.  The cost price and profit margin is well calculated so that some other fixed and variable overheads are covered as such that the hotel will not be running at a loss.

In doing this, the unit cost of materials used in a recipe is determined and multiplied by quantity of materials taken up.  Then a certain percentage of this cost is added as the profit margin at which the hotel makes sales.


Cash management entails prompt and planned collection of amount owed to the company by customers and equitable allocation of them to the company’s needs.  It is always ensured that he company funds are adequacy protected from malpractice and losses. Cash management also include planned funding of the activities of the company when the need arises and thus avoiding embarrassment to the company. Certain procedures have been advanced to enhance the effective control and careful spending and recourses.  The financial control system is designed to facilitate the allocation of funds in a manner compatible with their inflow and through restraints on spending.

These techniques are incorporated in the procedures governing the following transaction and recording procedures.

  1. Cash procedures
  2. Petty cash procedure
  3. Limits of authority.

Cash Management Tools:

          Cash flow project is one of the effective tools used by the organization to achieve efficient cash management the tool is applied by matching resources inflow with out flow in order to ensure that deficit and financial embarrassments are avoided.  Expected cash needed to cover budgeted expenditure are forecasted and cash inflow and outflow especially as regards the cash flow projection.  Timely decisions in respect of arrangements for short term credits are arranged in advanced.

It is the responsibility of the accountant to produce periodical cash flow statements based on historical cost data.

The accountants, as custodian of the company’s accounts and record have the cost and revenue data for preparing the cash flow projection.  Current and future receipt and expenditure plans would be made available to him and these with guide lines and spending limits established in the annual budget.  The managing director ensures that estimates of cash inflow and outflows are within reasonable expectancy limits


          When the cash flow projection reveals a surplus considered to be held in the company’s bank accounts, adequate arrangement is always made to re0invest this surplus to other viable ventures.  It is worthy to point out here that there is an expansion programme being embarked by the company, most of its surplus funds are diverted to this programmes.



          It is expected that when cash flow projection shows an expected deficit at the end of a period, detailed analysis are required to show how the short-fall will be financed.

This alternative sources of finance area considered such as loan, overdraft, or other sources approved by the directors.

In preparing the cash flow projection statement, only cash items are taken into accounts. Thus such costs or national costs such as depreciation, amortization of leases and pre-incorporation expenses (paid in previous years) are excluded from the statement.

Monitoring performance

          The cash flow projection ensures that  available cash is properly utilized for the company’s overall efficiency and profit maximization.  To ensure that anticipated result is achieved, effective monitoring of daily receipts and payments are made.

Cash position is compared with the balance shown in the cash flow projection.  Details of receipts and payments shown in the cash book are used to update future cash flows ad daily summarizes prepared showing daily balances.

Banks reconciliation statement is prepared on monthly basis with bank statements obtained from the banks.


The hotel is intended to be a private company incorporated under the companies acts, 1968.  Its object includes the provision of hotel and accommodation services to the public on a commercial basis.

Major sources of income to the hotel is through a fact expending hotel business.

The source of income to the company are as follows:

  1. Accommodation
  2. Bear
  3. Minerals
  4. Wine and hot drinks
  5. Suya
  6. Cigarettes
  7. Food sales
  8. Miscellaneous income
  9. Interest and short term investment


The managing director or any other persons authorized by him, has responsibility for all revenue and expenses of the company from all sources and for maintenance of accurate records.

Thus he must:

  1. Maintain bank account for the safe keeping of all cash revenues
  2. Ensure that surplus resources are efficiently managed by prudent investment strategies and:

iii.      Ensure that transactions entered into are in accordance with set objectives.  To ensure that adequate internal controls are exercised over these transactions and the related assets and liabilities, accounting for receipts and disbursements are carried out by separate units in the accounts section.

 Cash Receipts

A separate cash bank known as a receipt cash books is maintained for recording all cash receipts by the company.  The receipt cash book is a multiple column cash book subdivided into several account head.  Each account head represent a different source of income.

At the end of the month, the total of each column is posted to the credit side of that account in the general ledger.

Posting to the cash book shall be on a daily basis through the following documents

Source of income                    Primary document

Accommodation                      Bills issued to guest

Food                                        summaries prepared by the restaurant                                                                 cashier

All drinks                                Analysed into accounting sub-head in the bar summaries prepared by the service sections.

Laundry                                   Official receipts

Other income                           Official receipts


Sales are basically on a cash basis.  However, where credit facility is given

to some customers e.g. banks and other approved institutions by the

management, a book known as the debtor ledger is used in maintaining their transactions.

All sales made, whether on credit or cash are appropriately analyzed into the accounting sub-head and posted to the receipt cash book.

Consumption by credit customer are debited against the form in  the debtors, ledger and the bill are periodically sent to the organization for settlement.  On settlement of such bills the firms account.  In the debtor ledger is credited while the cash account receives, thereby being debited.

The method used when transferring balances to the ledger is by a simple transfer of the balances on the cash book to the general ledger

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