Hospitality Business Analysis: Financials, HR, and Legislation

This report focuses on the hospitality sector, specifically ABC Catering, and provides an analysis of financial management, human resource practices, and relevant legislation. It begins by defining financial management principles such as consistency, timeliness, and proper organization, and applies the double-entry bookkeeping system to record sales and purchase transactions in a general ledger. The report includes journal entries, ledger accounts, and profit and loss calculations using marginal and absorption costing methods. Furthermore, it touches upon the importance of the HR life cycle in retaining and developing talent, along with a brief overview of financial statements like the balance sheet. The report aims to provide a comprehensive overview of the financial and operational aspects of a hospitality business, offering insights into managing finances, and ensuring compliance with relevant regulations.

Hospitality Businesses
Toolkit

INTRODUCTION
Hospitality sector define various industries including food, drink, event management and
planning, travelling, transportation and the fields related to hotel and tourism industry.
Disposable income and leisure time of individuals decide the spendings over this sector. The
hospitality business mainly focuses on rendering services to consumers, to full-fill their
expectations. This sector earn profit whole year but mostly in summer time tourist like to travel
more. This report is based on ABC catering, a hospitality industry that is specialised in events
such as birthday parties, family gathering and weddings (Al Rayes and Kayiaseh 2017). To
operate catering service the financial performance is monitored and trial balance, general ledger
rules are required to follow here. This report will cover HR life cycle's role and importance to
retain and develop new talent and also some specific legislations that a organization should
follow will be explained further.
Task 1
P2. Investigating principles associated with management along with monitoring financial
performances.
Financial management defined as wider activity in an organisation. It involves procedures
including planning, organizing, controlling monetary funds for achieving the organisation goals
and objectives(Bohdanowicz and Zientara, P., 2015). Managing and monitoring the financial
performance is effective in term of increasing the value of firm and this also helps in setting
clear goals in organisation. For managing and monitoring financials performance in ABC
catering some of the principles are mentioned below:
Consistency: In ABC catering for measuring the performance there should be stability in
financial transaction. Transaction should be maintain in a regular basis. In this context, when
ABC catering adopt an accounting principle or method than they make sure that the method
should be apply regularly in future accounting period. By applying new method company can
change its old method.
Timeliness: In this context, timeliness is defined as the term in which accounting
information should be presented to the user at the time of requirement to take the decision. This
timeliness is important to protecting users important financial information. Timeliness principle
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is closely related to the relevance principles. In ABC catering transaction should be done on
time.
Proper Education: it is very important to have the knowledge of work which is
operated in organisation. In this context, manager should have the proper knowledge about the
work and read more books to get the knowledge about its work. Read every finance periodically
is beneficial for ABC catering in term getting the best opportunities on investment in the
market(Bowie and et. al., 2016)
Organize finance: This is considered as the first step of creating wealth. In this context,
credit cards, bank accounts, personal loans and retirement accounts should be tracked.
Budgeting software provide the complete solutions to track all accounts, make on time payment
or more.
Understand risk: Organisation face various risk so its important for manager to
understand that risk appropriately . In ABC catering the manager is not always sure about
investment that it will not create the risk for organisation. (Brown and et. al., 2017).
P2. apply the double entry book-keeping systems of debit and credit to record sales and
purchase transaction in general ledger.
Accounting is defined as the procedure in which is systematic and record of financial
transaction related to the business. This is also known as the process of summerizing,
analysing and reporting this transaction. In the system of accounting it is deal with two and
more the two transaction of a business. This gathered the proper and full information about the
services and products, expenses, debt, loans, income, etc. In this context ledger include accounts
of every liability and asset. The double entry system required two entries for a debit and credit
transaction. In ABC cater any purchases such as purchasing of assets and raw material
including payments from customers which is recorded in two places in the ledger system. This
company balances the total funds in the debit and credit accounts by using the equation given
below-
Journal Entries
Date Particulars Debit Credit
01/05/19
Cash a/c Dr
To Capital a/c 30000 30000
2

02/05/19
Store Rent a/c Dr
To cash a/c 1000 1000
03/05/19
Purchase a/c Dr
To Cash a/c 10000 10000
03/05/19
Purchase a/c Dr
To Account Payable a/c 15000 15000
04/05/19
Accident insurance policy a/c Dr
To Cash a/c 1200 1200
05/05/19
Purchase (food supplies)a/c Dr
To WH Adams Ltd a/c 8000 8000
05/05/19
Purchase (Beverages) a/c Dr
To WH Adams Ltd a/c 7000 7000
06/05/19
Laundry fees a/c Dr
To Cash a/c 200 200
07/05/19
telephone and internet a/c Dr
To Cash a/c 2220 2220
08/05/19
Rates, water charges and refuse a/c Dr
To Cash a/c 950 950
09/05/19
Wages and salaries a/c Dr
To Cash a/c 1740 1740
10/05/19
Food a/c Dr
To Sales a/c 20000 20000
11/05/19
Beverage a/c Dr
To Sales a/c 13000 13000
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Ledger:
Ledger
Accounts
Cash Account
Date Particulars £ Date Particulars £
01/05/19 To Capital 30000 02/05/19 By Store Rent 1000
03/05/19 By Purchase A/c 10000
04/05/19
By Accident
insurance policy
account 1200
06/05/19 By Laundry Fees 200
07/05/19
By Telephone and
Internet expenses 2220
08/05/19
By Rates, water
and refuse a/c 950
09/05/19
By Wages and
salaries 1740
31/05/19 By Balance c/d 12690
Total 30000 Total 30000
Purchase Account
Date Particulars £ Date Particulars £
03/05/19 To Cash 10000
03/05/19 To Account Payable 15000
05/05/19 To WH Adams Ltd 15000
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31/05/19 By Balance c/d 40000
Total 40000 Total 40000
Capital Account
Date Particulars £ Date Particulars £
31/05/19 To balance c/d 30000 01/05/19 By Cash 30000
Total 30000 Total 30000
Store Rent Account
Date Particulars £ Date Particulars £
02/05/19 To Cash 1000 31/05/19 By Balance c/d 1000
Total 1000 Total 1000
Accident insurance
policy Account
Date Particulars £ Date Particulars £
04/05/19 To Cash 1200 31/05/19 By Balance c/d 1200
Total 1200 Total 1200
Laundry fees Account
Date Particulars £ Date Particulars £
06/05/19 To Cash 200 31/05/19 By Balance c/d 200
Total 200 Total 200
telephone and internet
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Account
Date Particulars £ Date Particulars £
07/05/19 To Cash 2220 31/05/19 By Balance c/d 2220
Total 2220 Total 2220
Rates, water charges
and refuse Account
Date Particulars £ Date Particulars £
08/05/19 To Cash 950 31/05/19 By Balance c/d 950
Total 950 Total 950
Wages and salaries
Account
Date Particulars £ Date Particulars £
09/05/19 To Cash 1740 31/05/19 By Balance c/d 1740
Total 1740 Total 1740
WH Adams Ltd
Date Particulars £ Date Particulars £
31/05/19 To balance c/d 15000 05/05/19 By purchase 15000
Total 15000 Total 15000
Beverage Account
Date Particulars £ Date Particulars £
6

11/05/19 To sale 13000 31/05/19 By Balance c/d 13000
Total 13000 Total 13000
Food Account
Date Particulars £ Date Particulars £
10/05/19 To sale 20000 31/05/19 By Balance c/d 20000
Total 20000 Total 20000
Sales Account
Date Particulars £ Date Particulars £
01/05/19 To balance c/f 33000 10/05/19 By Beverage 20000
11/05/19 By Food 13000
Total 33000 Total 33000
Profit and loss account:
Calculation of costs:
A. Marginal Costing
Statement of profit or loss for January2019
PER UNIT Budgeted Actual- Q1 Actual- Q2
80000
Sales Revenue 1 80000 66000 74000
COST OF SALES
Cost Of Production: Variables
Direct Material 0.65 52000 50700 42900
Opening Inventory 0 0 7800
Less : Closing Inventory 0 52000 7800 42900 2600 48100
CONTRIBUTION 28000 23100 25900
Fixed Overheads 16000 16000 16000
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Fixed selling and administration costs 5200 5200 5200
Profit 6800 1900 4700
B. Absorption Costing
Statement of profit or loss for January2019
PER UNIT Budgeted Actual- Q1 Actual- Q2
80000 5200
Sales Revenue 1 80000 3100 74000
COST OF SALES
Cost Of Production: Variables
Direct Material 0.65 52000 50700 42900
Fixed Overheads 0.2 16000 16000 16000 16000
Opening Inventory 0 0 10200
Less : Closing Inventory 0 52000 10200 56500 3400 65700
CONTRIBUTION 28000 -53400 8300
Fixed selling and administration costs 5200 5200
Profit 6800 -58600
Balance Sheet for the year needed as on 2016-17
Accounts for BluSky Ltd (Extracts) 2017 2016
£’000 £’000
Turnover 2500 2200
Cost of sales 1250 1040
Gross profit 1250 1160
Distribution costs 40 148
Administration costs 668 595
Operating profit 542 417
Interest payable 20 19
Profit on ordinary activities before taxation 522 398
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Tax on profit on ordinary activities 0 10
Profit/(loss) for the financial year 522 388
Statement of Financial Position 2017 2016
£’000 £’000
Non-Current assets
Tangible assets
800
781
Current Assets
Inventories 345 139
Trade Receivables 355 295
Cash 45 114
Total Current Assets 745 548
Current Liabilities
Trade payables 375 300
Bank overdraft 170 40
Total Current liabilities 545 340
Non-Current Liabilities
Long term loans 200 211
Net Assets 800 778
Capital and reserves
Share capital 500 290
Retained Earnings (Profit & loss account) 300 488
Shareholders’ funds 800 778
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P3. Produce a basic trial balance applying the use of balance off rule to complete the ledger.
Finance play an very important role in every business. An effective management of
finance improving the performance of various function in a proper manner. In ABC catering it is
important for this organisation to make appropriate financial statements and monitor financial
performance. The financial statement of ABC catering is mentioned below:
TRIAL
BALANCE
S. No Particulars Debit Credit
1 Purchase Account 40000
2 Sales Account 33000
5 Cash Account 12690
6 Food Account 20000
7 Beverage Account 13000
WH Adams Ltd 15000
Wages and salaries
Account 1740
Rates, water charges and
refuse Account 950
telephone and internet
Account 2220
Laundry fees Account 200
Accident insurance
policy Account 1200
Store Rent Account 1000
Capital Account 30000
Account Payable 15000
TOTAL 93000 93000
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