How is Hotel Accounting Done?

The following article will guide you about how is hotel accounting done.

We all know that the main business of a hotel is to provide food and accommodation (i.e. shelter). But there are some big hotels who provide other comforts—recreation, entertainments, business facilities etc. Naturally, the scheme of accounting will depend on the nature and size of a hotel and its requirement although the principle of accounting will be the same.


A hotel may have different provisions for serving of refreshments or for serving of lunches and dinners including the arrangement of bar. Sometimes, they may also have separate sections for catering at different places on different social occasions.

For this purpose, separate accounts for purchases of various types of items and sales of various types of items must be maintained in order to ascertain the correct position which, in other words, will help them in maintaining accounts properly.

One interesting point may be mentioned here that the initial investment in fixed assets, viz. Land and Building, Furniture and Fittings, Telephone and T.V. in rooms etc. are very high in comparison with other business activities.

Similarly, cash requirement for operating expenses, of course, is not very high. The primary expenses consist of: Salaries and Wages of the staff, food and beverage. However, there are other items of expenses, viz., cost of food and beverage, repairs and maintenance, insurance, telephone bills, electricity expenses, printing and stationery, advertising etc.

An Analytical Purchase Book and a Cash Book (Payment side) may be maintained for recording purchases and expenses with different columns for:

Wines and Minerals; Groceries and Provisions, Cutlery, Glass, Plate etc., Bedding and Linens,


Establishments (Wages, salaries etc.), Furniture and Fixtures, etc.

Miscellaneous Expenses (Advertisement, Sales Promotions etc.)

Multi-Columnar Cash Book

On the contrary, the Sales Book and the receipt side of the Cash Book must have similar analysis column for:


Breakfast, Lunches, Dinners etc.

Bar, Cigarettes and Cigars etc.

Carriage, if any,

Telephone and Telex etc.

Receipts Side

(Besides the above, Cash Book will incorporate two other ledgers viz. Visitors’ Ledger and Personal Ledger.)

Visitors’ Ledger:

Practically, the personal accounts for visitors at an hotel may be most conveniently recorded with the help of a tabular visitors’ ledger. A typical form of a Visitors’ Ledger is presented.

Window or Visitors Ledger

Window or Visitors Ledger


Each day’s transaction is maintained by a separate page together with a column for each visitor. The room no. is indicated against each and every visitor. The amount brought down in each column represents the balance due at the commencement of the day from the connected visitor.

Similarly, when an account is settled, the cash received is recorded as a credit and consequently, there will be no balance in the account which will be carried forward in the next day’s page. But if there is any due at any date from a visitor, the same is transferred to a personal ledger.

The daily totals of each heading (both debit and credit) are recorded in the total column on the right- hand side. The same is transferred to a summary ledger or ordinary ledger for the purpose of obtaining the monthly, quarterly or half-yearly totals.

Form of Visitors’ Ledger in ordinary ledger form:

Visitors' Ledger

Besides the above, the Stock Ledger must be maintained in details so that direct control must be exercised regarding purchases, sales or uses of different items.

The undernoted principles should be remembered:

(i) Separate accounts must be maintained for receipts like, Wines, Beer, and Spirits etc. and payments made against them, the balance being transferred to Profit and Loss Account.

(ii) Appropriate adjustments are also to be made for Meals, Laundry etc. between the staff and the proprietor for ascertaining correct result. For this purpose, Wages Account (for staff) and Drawings Account (for proprietors) will be debited and the particular account, say, Meal, will be credited. Besides, all kinds of transfer from one section to another is to be maintained accordingly.

(iii) Expenses are to be apportioned among the different sections in an appropriate manner and consequently the same will be adjusted in Profit and Loss Account.

Method of Accounting:

The final accounts of a Hotel are prepared in the usual manner except for certain special items/adjustments under Double Entry System.

In short, while preparing final accounts special attention must be made for adjustments entries relating meals, accommodation etc. of the staff as well as the proprietor. From accounting point of view, it is better to open working accounts for various sections of Bar, Accommodation, Restaurant, Lunch, Dinners etc.

For instance, when collections are made, Accommodation Account is credited whereas rates, taxes, repairs to building, depreciation on bedding, attendants’ wages, proportionate establishment charges etc., are debited to Accommodation Account.

Similarly, cost and expenses relating to meat, eggs, fish, poultry, groceries, provisions etc. should be apportioned between Restaurant and Lunches and Dinners. It also becomes necessary to prepare separate accounts for Billiards Room, Banquet Halls, Laundry etc.

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