Hospitality accounting I | Old question paper 2015

Pokhara University


Level: Bachelor                         Semester-Spring                      Year: 2015

Programme: BHM                                                                     Full Marks: 100

Course: Hospitality Accounting I                                               Pass Marks: 45

Time: 3hrs


Candidates are required to give their answers in their own words as far as practicable.

The figures in the margin indicate full marks.


Section “A”

Very Short Answer Questions

Attempt all the questions.         10*2

  1. Write major differences in between book keeping versus accounting.
  2. Explain the rules of Debit and Credit with example under Modern Approach.
  3. Point out Accounting Cycle/Process.
  4. Write major two differences in between Capital receipt and revenue receipt in accounting treatment.
  5. Calculate current assets from the following information.

Account receivable 50,000, Account payable 20,000, Cash in hand 15,000, Salary expenses 25,000, Prepaid expenses 5,000, Marketable securities 10,000, Bills receivable 10,000, Inventories 10,000, Preliminary expenses 10,000.

  1. Calculate the surplus amount to be transferred to be balance sheet from the given information:

Net profit                                                     Rs.100000

Dividend paid                                               Rs.70,000

Transfer to General Reserve                         Rs.10,000

Beginning balance of retained earnings       Rs.50,000

  1. Define Uniform System of Accounting in Lodging Industry (USALI).
  2. From the following transaction calculate cost of goods sold and gross profit.

Purchase Rs 1,00,000, Carriage Rs 5,000, Sales Rs 1,75,000, Opening stock Rs 50,000, Wages Rs 25,000 and Closing stock Rs 60,000.

  1. Calculate current ratio from the following:

Current Assets Rs 1,00,000 and current Liability Rs 50,000.

  1. What is an Annual report means?


Section “B”

Descriptive answer questions

Attempt any six questions.         6*10

  1. Following cash and banking transaction are given.

Chaitra 1: Cash in hand Rs 12,000 and at bank Rs 16,000.

Chaitra 2: Goods purchase of 3,000 and paid by cheque.

Chaitra 3: Goods sold for Rs 5,000.

Chaitra 5: Furniture Purchase of Rs 8,000

Chaitra 7: Cash deposited into the bank Rs 3,500.

Chaitra 9: Cheque Received from Govinda Rs 5,000.

Chaitra 11: Cash withdrew from the bank for personal use 2,000.

Chaitra 15: Rent paid Rs 800.

Chaitra 20: Paid to Suresh By cheque Rs 6,000.

Chaitra 1goods purchase from ABC company Rs 10,000.

Required: Prepare double column cash book with cash and bank column.

  1. Account balance at the beginning of the day 1st January 2016.

A/c Payable Rs 5,400, Office supplies Rs 5,100, Food sales a/c Rs 5,300, Hari a/c Rs 5,100, Capital a/c Rs 5,500, Cash Rs 6,000

Other transactions are as follows.

  1. Received cash from Hari Rs. 50
  2. Purchase food on cash Rs. 300
  3. Paid rent for the month of February Rs. 500
  4. Food sales on cash Rs. 700
  5. Paid accoubt payable Rs. 300


  1. Journalize the transaction
  2. Prepare the Ledger a/c
  3. Prepare trial balance
  1. The following adjusted trial balance of Everest Hotel is given to you:
Debit Items Amount Credit Items Amount
Land and Building 50,00,000 Common share Capital 60,00,000
Plant and Kitchen Equipment 15,00,000 Share Premium 8,00,000
Furniture 10,00,000 General Reserve 2,00,000
Utensils 5,00,000 Retained Earnings 10,00,000
Investment in shares 12,00,000 Bank loan 9,00,000
Cash balance 50,000 Account payable 1,00,000
Bank balance 2,50,000 Salary Payable 40,000
Inventory of food materials 80,000 Food and Beverage Revenue 43,00,000
Account Receivables 3,00,000 Room Revenue 21,00,000
Advance to Employees 2,40,000 Income from investment 1,00,000
Underwriting commission 60,000 Gain on sale of land 50,000
Cost of food and beverage sold 36,00,000
Salary expense 8,00,000
Utility expense 7,00,000
Bank charges 75,000
Insurance premium 55,000
Interest on bank loan 1,20,000
Income tax 50,000
Loss on sale of old furniture 10,000
1,55,90,000 1,55,90,000


  1. Multi-step Income Statement.
  2. Statement of retained earnings.
  3. Classified balance sheet.
  1. The following income statement and balance sheet of Ratnagiri Resort is available to you.

Income Statement for the period 31st December 2015.

Particulars Amounts Amounts
Sales revenue 80,000
Less: Cost of goods sold
Opening stock 6,00,000
Purchase 30,00,000
Wages 8,00,000
Closing stock 3,00,000 41,00,000
Gross Profit 39,00,000
Add: Other Income 1,00,000
Less: operating expenses
Administrative and general expenses 12,00,000
Selling and distribution expenses 9,00,000 21,00,000
Operating income 19,00,000
Less: Depreciation expenses 2,00,000
Earnings before interest and tax 17,00,000
Less: Interest expenses 3,00,000
Income before tax 14,00,000
Less: Income tax 3,50,000
Net income after tax 10,50,000


Balance sheet as on 31st December, 2015

Liabilities Amounts Assets Amounts
Common share capital@Rs.100 each 50,00,000 Land and Building 40,00,000
10% Preference share capital 10,00,000 Plant and Machinery 20,00,000
Retained earnings 10,50,000 Furniture and Fittings 8,00,000
Bonds payable 4,00,000 Cash balance 50,000
Account payable 2,50,000 Bank balance 5,50,000
Income Tax Payable 3,50,000 Stock 3,00,000
Rent Payable 1,50,000 Pre-paid salary 1,00,000
Account Receivable 4,00,000
82,00,000 82,00,000



i)Current ratio ii) Quick ratio iii) Debt equity ratio iv) stock turnover ratio v) Account receivable turnover ratio vi) Capital employed turnover ratio vii) return on assets viii) Return on common shareholder’s equity ix) Earnings per share x) Net profit margin


  1. Why do you think preparation of Income statement and Balance sheet is very important for every business organization? Explain what are the information you can get from there?
  2. The Louis V Hotel has 250-room facility with several profit centers. The hotel is open through-out the year, and generally about 2 percent of the rooms are being repaired or renovated at all times; therefore assume that rooms are unavailable for sale. During 2001, the hotel sold 76,400 rooms and experienced an average occupancy per-room of 1:42 people. The accounting department has supplied the following information concerning the food department:

Ending Inventory                                                      Rs. 35,000

Consumption by employees (free of charge)          Rs. 5,000

Cost of food sales                                                    Rs.312,000

Food cost%                                                              35%

Food Inventory turnover                                          12 times


  1. Paid occupancy rate for 2001
  2. Number of paid guests of 2001
  3. Beginning inventory of food
  4. Food sale
  5. Multiple occupancy percentages (assume that no more than two persons occupied a double room. The following balance sheets of Max Company are provided.
Liabilities Last year This year Assets Last year This year
Common share Capital 4,00,000 5,00,000 Land and building 7,00,000 3,00,000
Preference share Capital 3,00,000 1,00,000 Plant and Machinery 50,000 2,00,000
Retained Earnings 2,00,000 3,00,000 Investment 30,000 70,000
Debenture 1,00,000 0 Account receivable 1,00,000 80,000
Account Payable 50,000 70,000 Cash and bank 1,20,000 2,00,000
Salary Payable 40,000 10,000 Inventory 1,00,000 1,50,000
Insurance payable 30,000 50,000 Pre-paid rent 20,000 30,000
11,20,000 10,30,000 11,20,000 10,30,000

Other information;

  1. Sales during the year Rs. 14,00,000
  2. Cost of goods sold Rs. 8,00,000
  3. Operating expenses Rs. 4,50,000 including depreciation Rs. 50,000
  4. Land and building sold during the year Rs. 4,45,000.
  5. Plant and machinery purchased during the year Rs. 1,55,000.
  6. Divided paid Rs. 50,000.

Required: Cash Flow Statement.


Section “C”

Case analysis 20

  1. The trial balance of Chhaimale Resort Pvt. Ltd is provided to you.

Trial Balance as on 31st December, 2015

Debit Items Amounts Credit Items Amounts
Business premises 1,00,00,000 Sales revenue
Kitchen equipment and utensils 40,00,000 Room revenue 20,00,000
Furniture and fittings 20,00,000 Food revenue 50,00,000
Cash and bank balance 5,00,000 Beverage revenue 70,00,000
Inventory of food materials 4,00,000 Other minor operating   dept. 5,00,000
Account receivable 6,00,000 Common share capital 50,00,000
Other current assets 2,00,000 Preferences share 30,00,000
Cost of sales: Retained earnings 15,00,000
Food 25,00,000 General reserve 5,00,000
Beverage 35,00,000 Debenture 45,00,000
Other minor operating dept. 5,00,000 Account payable 15,00,000
Payroll and related expenses: Expenses payable 10,00,000
Room department 7,00,000 Other payable 1,20,000
Food department 6,00,000
Beverage department 3,00,000
Other minor operating dept 50,000
Administrative expenses 10,00,000
Marketing expenses 15,00,000
Other expenses:
Room department 2,00,000
Food department 1,00,000
Beverage department 1,50,000
Other minor operating dept 20,000
Administrative expenses 4,50,000
Marketing expenses 2,00,000
Power expenses 6,00,000
Fixed expenses
Rent expenses 10,00,000
Interest expenses 1,50,000
Depreciation expenses 4,00,000
3,16,20,000 3,16,20,000


Other information:

  1. Hotel has 50 double rooms and 100 single rooms. Double room is equivalent to 1.5 times of single room in terms of facilities and services.
  2. Hotel has normally 90% occupancy in season and only 40% in off season. For this purpose 40 weeks considered as season and 12 weeks as off season.
  3. During the year 4,998 rooms are occupied as complimentary.
  4. Food cover sold during the year 10,000.


  1. Income statement and balance sheet under USALI format.
  2. Calculate the following operating ratio;
  3. Average daily room rate
  4. Average food service check
  5. Food cost percentage
  6. Paid occupancy percentage
  7. Beverage cost percentage



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