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

Recommended Reading

Main Text:

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

Indicative Text:

Alternative Text and Further Reading: