Use the following information from a hotel’s income statement to solve the questions. 2019 ($) Total Revenues 1,200,000 Rooms: Revenue 750,000 Labor Costs & Related Expenses 100,000 Other Expenses 55,000 Room Department Income (Loss) 595,000 Food: Revenue 390,000 Cost of Sales 130,000 Labor Costs & Related Expenses 82,500 Other Expenses 38,500 Food Department Income (Loss) 139,000 Gift Shop: Revenue 60,000 Cost of Sales 44,800 Labor Costs & Related Expenses 16,286 Other Expenses 8,000 Gift Shop Department Income (Loss) (9,086) Total Operated Departments Income ? Total Undistributed Operating Expenses 282,000 Gross Operating Profit ? Rent, Property Taxes and Insurance 106,000 EBITDA ? Depreciation 30,000 Interest Expense 80,000 Income before Income Taxes 226,914 Income Taxes 66,000 Net Income 160,914 What is the company’s Gross Operating Profit in year 2019? Group of answer choices $442,914 $633,520 $323,714 $461,086
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
(Q 12-14) Use the following information from a hotel’s income statement to solve the questions.
|
2019 ($) |
|
|
Total Revenues |
1,200,000 |
|
Rooms: |
|
|
Revenue |
750,000 |
|
Labor Costs & Related Expenses |
100,000 |
|
Other Expenses |
55,000 |
|
Room Department Income (Loss) |
595,000 |
|
Food: |
|
|
Revenue |
390,000 |
|
Cost of Sales |
130,000 |
|
Labor Costs & Related Expenses |
82,500 |
|
Other Expenses |
38,500 |
|
Food Department Income (Loss) |
139,000 |
|
Gift Shop: |
|
|
Revenue |
60,000 |
|
Cost of Sales |
44,800 |
|
Labor Costs & Related Expenses |
16,286 |
|
Other Expenses |
8,000 |
|
Gift Shop Department Income (Loss) |
(9,086) |
|
Total Operated Departments Income |
? |
|
Total Undistributed Operating Expenses |
282,000 |
|
Gross Operating Profit |
? |
|
Rent, Property Taxes and Insurance |
106,000 |
|
EBITDA |
? |
|
|
30,000 |
|
Interest Expense |
80,000 |
|
Income before Income Taxes |
226,914 |
|
Income Taxes |
66,000 |
|
Net Income |
160,914 |
What is the company’s Gross Operating Profit in year 2019?
The income statement is one of the essential part of the financial statements used for reporting the financial performance of the company over a specific accounting period, It includes revenues, expenditures, and also gain or loss.
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