Uniform system of accountancy

For 3rd & 4th Sem

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.

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 .

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 .

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 .

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 .

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.

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 .

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

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.

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 ) .