Critical Analysis of the Role of Accounting and Finance in Hotels

This report provides a critical analysis of the role of accounting and finance within the hotel industry, specifically focusing on the Affinia Hotels in New York. It explores the vital importance of accounting and finance in managing overall business performance, including profitability, sales, and expenses. The report delves into the application of various management accounting techniques, such as cash basis and accrual accounting, and their impact on planning, controlling, and decision-making processes. It examines financial planning, analysis of financial statements, standard costing, budgetary control, managerial costing, and fund flow statements. The conclusion emphasizes the importance of a sound financial position for sustainable development, highlighting the use of best accounting practices within the hospitality industry. The report also discusses the impact of financial position on various business functions and the use of accrual accounting in managing financial data.

Critical analysis of the role of
accounting and finance in a hotel
industry

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY 500............................................................................................................................1
Role of management accounting techniques ...............................................................................1
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Accounting and Finance plays very important and vital role in managing the overall
business and its growing performance because the commercial practices are carry out to earn the
profits. So total expenses, savings, profitability and sales can be determined by the finance
function within the organization in order to determine the growth and actual status of the
business. Accounting can be termed as the process of bookkeeping which is involved in making
the financial records of the business transactions which represents the assets, liabilities and
operational costs of the business along with the total profits and losses incurred during a specific
time. This report will be based on the role of the finance and accountability within the Affinia
hotels in New york. The report will help in creating a better understanding about the
management accounting techniques which assists in planning, controlling and decision making
process of the company.
Background:
This is a chain of the Boutique Hotels offering accommodations in UK. This hospitality
company mainly focusses on various different types of offerings such as Accommodations, food,
fitness tranquillity and many more customised events which allows the customers to personalize
their stay prior to the arrival (Weetman, 2019). This Hotel was founded in 1962 by Benjamin j.
Denihan. The Affinia Hotel currently performs the effective accounting practices at workplace
and this accounting procedure help the fi9rm in preparing the financial statements that confirms
the regulations and accounting principles which are based on IFRS and GAAP. This company
basically carryout the Accrual accounting technique which alows them to determine the accurate
financial position of the company. This method helps them to detect proper Cash in flows and
outflows of the hotel.
MAIN BODY 500
Role of management accounting techniques
The main function of the cost accounting technique is to present the cost data according
to various different departments of the Affinia Hotel (Abernethy and Campbell, 2018) . The way
in which company records the payroll taxes basically determines the companies accuracy in
determining the actual financial status. This accounting data is further compared with the
estimated cost in order to determine the actual finamncial condition of teh firm. Sound financial
position of the company basically impacts on different business functions such as:
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Planning: In order to plan for the new strategies and further investment, company need to assess
the financial capabilities of the hotel. This ultimately influence the planning process within the
Affinia Hotel.
Controlling: Also in a situation in which the company is earning huge profits then they would
also have the cap[abilities to take the risks regarding new investments in the business (Qian,
Hörisch and Schaltegger, 2018). These investments are generally made to enhance the facilities
for the customer as well as staff which results in improved performance of the company and
generates huge profits.
Decision making: Management of the accounts within the hotel represents the actual companies
potentialities and abilities to grow and sustain in this market for the long time (Zeng, 2018) .
Therefore, managers and other top management people have the power take the decision
regarding such decisions which requires a cost to improve the business performance.
There are different types of management accounting techniques which are as follows:
Cash basis accounting
During this type of accounting management technique, Affinia Hotel, finance department
records the expenses and inflows financial accounts. This system is much easier and easy to be
handled.
Accrual accounting
This accounting method is most popular among the big hotels within the hospitality
industry as the revenue or the transaction being proceed on the basis of completion of the actual
transaction.
Financial planning: It can be termed as a comprehensive plan in which company can evaluate
the current outflows along with predictions regarding the future incomes, asset values and
withdrawal plans of the Affinia hotel (Horton and de Araujo Wanderley, 2018).
Analysis of Financial statements: These are statements which involves in analysing the
financial position by reviewing the financial reports of the company (Bedford and Speklé, 2018)
. These analysis are basically based on the frequent analysis between the revenues and expenses
which are generally listed on the income statements, assets, liabilities and equity accounts which
are represented within the actual balance sheet to represent one or more financial years.
Standard costing: This is an accounting system used by some manufacturer companies to
represent the variances between actual cost of goods or services produced.
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Budgetary control: It is used by the managers to set the financial and performance goal which
compares the actual results and budget.
Managerial costing: This can be termed as a fixed or variable cost which determines the
changing volume according to the change in the cost of the goods and services.
Fund flow statements: This is generally prepared to analyse the reasons which are involved
with changed in the financial position of the company by comparing two balance sheets(ter Bogt
and Scapens, 2018).
CONCLUSION
From the above study, it can be concluded that accounting and financial position of the
company states the potential and sustainable development of the firm. This study has provided
various different types of accounting method techniques which helps in accessing the assets,
liabilities as well as total inflows and outflows of the firm. Along with this, the study has also
created a complete understanding about the use of the best accounting practices used within the
hospitality industry. It has also provided a brief view about the use of accrual method within the
company which helps in managing the huge financial data within the hotel.
In addition, it can be easily determined that companies financial position can impacts on
the planning, controlling and decision making within the Affinia Hotel. It can also be observed
that big organization generally uses the accrual accounting management technique which enables
them to record the transaction after the completion of the overall transaction and not with
receiving the cash within the firm. Along with this, the present study has provided the two main
accounting methods which are used by the organization to record the day to day expenses and
incomes of the company.
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REFERENCES
Books and journals
Abernethy, M.A. and Campbell, D., 2018. Virtual Issue on Empirical Management Accounting
Research.
Bedford, D.S. and Speklé, R.F., 2018. Construct validity in survey-based management
accounting and control research. Journal of Management Accounting Research. 30(2).
pp.23-58.
Horton, K.E. and de Araujo Wanderley, C., 2018. Identity conflict and the paradox of embedded
agency in the management accounting profession: Adding a new piece to the theoretical
jigsaw. Management Accounting Research. 38. pp.39-50.
Qian, W., Hörisch, J. and Schaltegger, S., 2018. Environmental management accounting and its
effects on carbon management and disclosure quality. Journal of cleaner
production. 174. pp.1608-1619.
ter Bogt, H.J. and Scapens, R.W., 2018. Institutions, Situated Rationality and Agency in
Management Accounting: Extending the Burns and Scapens Framework. Available at
SSRN 3167885.
Weetman, P., 2019. Financial and management accounting. Pearson UK.
Zeng, H., 2018. Reciprocal Interaction between Management Accounting and Other
Management Roles. Open Access Library Journal. 5(11). p.1.
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