CHI Financial Accounting in Hospitality 3

Question 1

A property's total fixed costs are $200,000 per month and its contribution margin per occupied room is $80. What is the break-even number of rooms?

Accepted Answer

2,500 rooms

Answer

Break-even units = Fixed Costs ÷ Contribution Margin = $200,000 ÷ $80 = 2,500 rooms.

Question 2

Which depreciation method results in higher depreciation expense in the early years of an asset's life?

Accepted Answer

Double-declining balance method

Answer

Double-declining balance is an accelerated depreciation method that records higher expense in early years.

Question 3

On a hotel income statement, 'Gross Operating Profit' (GOP) is calculated as:

Accepted Answer

Total revenue minus total departmental expenses and undistributed expenses

Answer

GOP equals total revenue less departmental expenses and undistributed operating expenses per USALI.

Question 4

A front desk agent collects a $200 cash advance from a guest. How should this transaction be recorded?

Accepted Answer

Debit Cash, Credit Guest Deposit Liability

Answer

A cash advance is a liability until earned; debit Cash and credit Guest Deposit Liability.

Question 5

Which ratio measures a hotel's ability to meet short-term obligations using its most liquid assets?

Accepted Answer

Quick ratio

Answer

The quick ratio excludes inventory and prepaid expenses, using only the most liquid assets to assess short-term solvency.

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