WRITTEN BY G.K.SAWHNEY ACCOUNTS VISITING FACULTY AT IHM DEHRADUN

1. For 3rd & 4th Sem

3. Hotel or Hospitality is the largest
industry in India as well as entire
world .Most of countries try to attract
the tourist through launching of
attractive tourist places which may
able to fulfill their ambition of joy and
peace both.
This industry is soul of service
sector because this industry is cause of
highest rate of return to the
investors/potential investors.

4. Hotel industry generates thousands
jobs by way of room service
,production of food ,restaurant service
and at different managerial levels . So
people with the ambition of high
professional skills join the institute like
IHM Dehradun provide the
professional training matching with
international standards .

5. So in hotel/hospitality industry common
accounting systems are followed . It is
helpful to candidates at the time of
selection as manager or other managerial
posts . Same accounting system or uniform
accounting system helpful to understand
the financial procedures and policies of the
administration .
The most successful system of
accounting was the one introduced by the
federation of master printers in 1911 and
later in march 1926 AHMA ( American
hotel and motel association ) accepted the
draft of system of uniform accounting .

6. Causes /reasons /objectives of adopting
uniform system of accountancy
1. Existence of different systems of book-keeping :- in
different countries different methods of book-keeping were
popular . For example : In UK double entry system was
popular on the other hand in INDIAN SUB CONTINENT Indian
Accounting System (Bhartiya Bhahi Khata Pranali) was
popular . But in USA Accounting system is based on
ACCOUNTING EQUATIONS. Under such circumstances hotel
industry needs an uniform accounting system become a must.
2. Size of business :- after induction of GATT and WTO most
of big industrial houses decide to open multinational chain of
hotels. As a result size of business of hospitality industry
expanded crosses the boundaries of countries. So expansion of
business , administration needs a common system of
accounting through which they can understand the financial
activities in the terms of turnover ,cost and profitability .

7. 3. Method Of Production Of Food and Services:-
In hotel industries food and service are the two
main elements of activities of industry but it is
differ from manufacturing
/construction/husbandry industry . Uniform
accounting system facilitates a specialized system
suited accordance with hotel industry .
4. Difference in Apportionment :- There can be
a large degree of difference in the accounting
treatment of expenses ,different bases of
collection ,absorption of overheads , method of
depreciation ,etc. Moreover in departmental type
hotel spend different expenses combinedly and
later distribute /allocate /apportioned the
expenses in any logical manner .

8. 5.Nature of Activities :- Normal business is
working 8, 10 or 12 hours but in hotel
industry nature of activities differ from
normal business houses because hotel
provides its services round the clock 24*7, so
in case of hotels special system of
accounting is needed for hotels.

10. 1.Transfer Of Employees :- Under the global expansion
of hotel industry administration may decide to transfer
the employees from one country to another . Under
such situations employee may faces the difference in
method of accounting .But due to the efforts of PUSA
INSTITUTE /IHM students clearly understand the
Uniform system of accounting .Now it is easier for
fresher /transferred candidates to familiar with
accounting system of next destination .
2.Comparision Of financial Results :- At the end of
each financial year /accounting year owner or board
of directors asses the financial statements/financial
results for the two accounting periods or between the
two branches of hotel for the same period and
thereafter decide the corrective step for future .it will
be helpful to increase the efficiency of subordinates .

11. 3.Share Buying Decision :- At the time of merger of
two or more hotels value of each share is decided
on any logical basis which is helpful at the time of
valuation of NETWORTH of different hotels .
Through this assessment financial management take
the appropriate decision in direction to enjoy the
fruitful profits in future .
4.Helpful for tax authorities :- At the end of each
financial year financial statements are filed with
income tax authorities by hotels like other business
houses . But nature of service industries are
different . In this case Uniform accounting system
is helpful to income tax authorities for the purpose
of tax liability of particular hotel

12. 5.Decision About Lease :- In hotel industry it is a
custom that owner of building granted lease to
professional people who has experience about
hotel industry/hospitality industry . At the time
of taking the lease of a hotel uniform accounting
system is helpful during the estimation of future
profits . Moreover this system helps about the
growth rate of such hotel in recent years .
6. Classification Of Transactions :- Uniform
accounting system is helpful to classify the
transactions on the basis of services available at
hotel like room service ,food and beverage
department service , outdoor events
arrangement service ,package offers, bar
department etc. so Uniform accounting system
helpful to classify the transactions.

13. 7.Helpful In Rating Of Hotel :- Goodwill of a
hotel depends upon rating given by
International governing council For Hotels. This
rating is based on number of services available
in hotel, hygiene conditions at kitchen and
accounting procedure adopted by the hotel .In
this case uniform accounting system plays vital
role in rating of hotel .
8.Adjustment Of Depreciation :- According to
uniform accounting system a fix procedure of
depreciation must be adopted by hotel industry
.It helps to adjust the book value of assets
according to CPP (Current Purchasing Price ) .