Institute of Commercial Management | Qualification Subject

Accounting, Purchasing & Cost Control

Main Topics of Study

Financial Position

  • Exchange and value
  • Capital
  • Financial position
  • Separate entity
  • Assets and liabilities
  • The balance sheet
  • Types of assets and liabilities

Types of Financial Transaction

  • Transactions and the balance sheet
  • The duality of transactions and the money measurement concept
  • Profit defined
  • Types of expenditure: the capital/revenue distinction
  • Generic types of transaction

Recording, Processing and Correcting Financial Transactions

  • The double-entry system
  • Periodic balancing of the books
  • The trial balance
  • Types of error
  • The correction of errors

Preparing the Final Accounts

  • Calculating profitability
  • The trading and profit and loss account
  • The accruals concept
  • The balance sheet

Accounting for Fixed Assets

  • Definition of fixed assets
  • Depreciation of fixed assets
  • Depreciation and the accruals concept
  • Methods of depreciation
  • Recording, processing and reporting depreciation in the accounts
  • Accounting for the acquisition and disposal of fixed assets
  • The consistency concept
  • Intangible fixed assets

Accounting for Stocks

  • Types of stock
  • Stock valuation and profitability
  • Control and verification of purchasing and receiving
  • Stock control systems
  • Stock valuation when input prices are changing

Accounting for Credit Transactions

  • Cash and credit transactions
  • Debtors and creditors
  • Reconciliation of statements and ledger accounts
  • Credit control
  • Provision for bad debts
  • Accounting, purchasing and cost control

Accounting for Cash

  • The importance of cash management
  • The cash book
  • Bank reconciliations
  • Till and takings management
  • Credit cards
  • The petty cash system
  • Foreign currency exchange
  • Ticket systems for cash sales
  • Introduction to cash flow statement
  • Cash and the accruals concept

Accounting for Employees

  • The significance of employee costs in HTL businesses
  • Remuneration methods
  • The payroll system
  • Accounting for employment costs
  • Reporting employee costs

Accounting for VAT

  • The principles of VAT
  • Rates and scope of VAT
  • Calculating VAT liability
  • Completing a VAT return and paying VAT
  • Accounting for VAT
  • The mechanics of VAT for tour operators and travel agents

Accounting for Recreation and Leisure Clubs

  • Types of recreation and leisure clubs
  • The distinction between clubs and commercial organisations
  • Sourcing of income for recreation and leisure clubs
  • Measuring and reporting income and expenditure
  • Preparation of final accounts and notes

Accounting for Multiple Ownership

  • The partnership agreement
  • The appropriation of profit
  • Changes to the partnership
  • Partnership dissolution and conversion
  • Distinctive features of limited companies
  • The final accounts of limited companies
  • Corporate capital structure

Costing a Product or Service

  • Expenses and costs
  • Cost control and organisational structure
  • The three main components of cost
  • Calculating the direct material cost
  • Calculating the direct labour cost
  • Allocation and apportionment of overhead costs
  • Calculating the total cost of a product in a multiproduct, multidepartmental business
  • Accounting, purchasing and cost control

Pricing a Product or Service

  • Pricing based on cost data
  • Pricing decisions based on market conditions
  • Pricing to optimise profit using cost and market information
  • Pricing strategies in special situations

Accounting for Contribution

  • The behaviour of cost and revenue against output
  • Breakeven analysis
  • Contribution theory
  • The contribution/sales ratio
  • Evaluating business alternatives
  • Contribution theory and product-mix decisions
  • Profit maximization where resources are limited
  • Make-or-buy decisions

Planning and Budgeting

  • Strategic planning
  • The annual planning cycle
  • Preparing individual budgets
  • Cash budgets
  • Master budgets
  • Behavioural aspects of planning and budgeting

Standard Costing and Flexible Budgeting

  • Monitoring performance against plans and budgets
  • Responsibility for variances
  • Flexible budgets
  • A standard costing system
  • Calculation of individual variances
  • The profit reconciliation system
  • The variance analysis report

Accounting for Capital Investment Decisions

  • The long-term objectives of a business
  • Capital investment
  • Collecting data for project evaluation
  • Evaluating capital investment projects
  • Pros and cons of the four methods
  • Qualitative factors in capital investment decisions

Interpretation and Assessment of Financial Information

  • Ratios and comparative analysis
  • Gross and net profit margins
  • Primary performance ratios
  • Return on Capital Employed (ROCE)
  • Liquidity ratios
  • Working capital efficiency ratios
  • Efficiency ratios for the hotel industry
  • Capital structure and the risk-return relationship
  • Cost-volume-profit ratios
  • Value-added ratios
  • Other value-added ratios
  • Weaknesses of ratio analysis
  • Accounting, purchasing and cost control

Spreadsheet Applications in Accounting

  • The value of spreadsheets
  • Common commands and functions
  • Preparing the final accounts of a theatre
  • Preparing a product cost structure
  • Pricing rooms using the Hubbart Formula
  • Graphing the revenue and cost functions of a travel agency
  • Graphing a breakeven chart
  • Preparing a cash budget
  • Examining alternative purchase options
  • Comparing two hotels in two different market sectors

Example Candidate Response Booklet

Example Candidate Response (ECR) Booklets are a source of crucial information for Centres and Candidates as they use real candidate responses. We ask Senior Examiners to comment on five or more responses in terms of why the mark was awarded with commentary about how to improve the answer (if necessary).

Recommended Reading

Main Text:

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Accounting for Hospitality, Tourism & Leisure by G Owen (FT Prentice Hall)

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