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ACCOUNTING IN THE HOSPITALITY INDUSTRY (A CASE STUDY OF SAVANNAH SUITE LIMITED, ABUJA)

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Many people think of accounting as a highly technical field, which can be understood only by professional accountants. Actually, nearly every pone practices accounting in one form or another on an almost daily basis. In  Quote, American Accounting Association (1999: p5) Define Accounting is the art of system of measuring the results of business activities, communicating and interpreting financial activities. Whether one is preparing a household budget, balancing one’s check book, preparing one’s income tax  return or running general motors one is working with accounting concepts and accounting  information. Another definition by Vickery, B.G. (1973: P15) principle s and practice of Book-keeping and Accounts. Accounting has often been called the language of business, as well as a language of communication in an organization, it is logical that a language should change to meet to changing needs of society. In accounting, the changes and improvements are continually being made. We live in an era of accountability. Although accounting has made it’s most dramatic progress in the field of business, the accounting function is vital to every unit of out society. An individual must account for his or her income, and must file income tax returns.
Often an individual must supply personal accounting information in order to buy a car or home. To qualify for a college scholarship, to secure a credit card, o to obtain a bank loan. Large corporations are accountable to their stockholders, to governmental agencies and to the public. The federal government, the states, the cities, the school district, al must use accounting as a basis for controlling their resources and measuring their accomplishments. Accounting is equally essential to the successful operation of a business, a university, a fraternity, a social program, or city.   In every electric the voters must make decision at the ballot box on issues involving accounting concepts; therefore, some knowledge of accounting is needed by all citizens if they are to act intelligent in meeting the challenges of our society. The knowledge of accounting and the ability to use accounting information aid in making economic and political decision. At this point, I will like to introduce the history of business hotels limited.
Benue hotels was built as a result of the completion of the Makurdi rail way/road Bridge opened on the twenty fourth (24th) May, 1932. It came into existence is the early seventy and was then known as a  great house. This guesthouse then used by top government officials, colonial   masters during state tours and officials visits. The bridge brought in a lot of visitors into Makurdi town, as the town was the first to have had such a long and attractive bridge. This also gave rise to accommodation demand in Benue State, hence the sprigging up of other hotels like the Makurdi Plaza Hotel, Bem Hotel, and also the government started the uncompleted 300-bed room international hotel (Sheraton Hotel). The Makurdi guesthouse than turned to its present name Benue Hotels limited. 1986 when Nigeria is was divided up into nineteen states. The Benue State Government owns 75% shares in Benue Hotels limited while the Nigerian hotels owns 24 shares. The Benue hotels limited is managed by the Nigerian Hotels; with their head quarters situated in Lagos.
1.2     STATEMENT OF RESEARCH PROBLEMS
Accounting to Osuala (1982: 26) Problem definition is the most important part of a research and a statement of a problem elaborate upon the information implied in the title of the research. One of the greatest challenges facing the Hotels industry today, is the increasing incidence of lack of proper accountability. It has in recent constituting serious problems to hotels in Nigeria, this lack of proper accountability have led to the failure and subsequently closure of a great number of hotels in Nigeria. With the frequent cause of lack of proper accountability in the hotel industry today, one would began to ask questions. Thus the questions, which prompted the researcher’s inquisitive mind to carry out this study, are as follows:
i.        What are the contributions of accounting department to the   development of the hotel?
ii.       What are the procedures that are followed in carrying out accounting functions in hotels?
iii.      What role does accounting department play as part of internal control?
iv.      What are the problems facing accounting department
v.       Is accounting department effective?  
1.3     OBJECTIVES OF THE STUDY
The study is undertaken to throw more light on accounting procedures and problems encountered in hotels. The study is intended o take the researcher to the study and understanding the modern accounting theory and practice as well as examine the disparity and relationship between the work of an accountant in the hotel industry and other industry. The study is intended to investigate and bring out the relative importance of accounting in hotels examines the function of accounting department in hotels. The study is also aim at analyzing the causes of problems encountered in carrying out accounting functions or activities in hotels and also recommend possible solutions.  
1.4     SIGNIFICANCE OF THE STUDY
The study is of significance to hotels with accounting department or division so that through this research they can appreciate the relevance of the accounting department o management efficiency. This they can recognize it scope of operations and areas where there are problems and of course to make effort to rectify the problems. The research work can even be of more particular importance to the management of savannah suite limited Hotels limited. This can also serve as an information to the following groups of people:
-        Student
-        Business community
-        Researcher
-        Investors
-        Managers  
1.5   SCOPE OF THE STUDY
In studying the accounting in the hotel industry, emphasis was led on the accounting department or division of Savannah suite limited. The financial data collected and used in the course of this research work covers the period between 2000-2001.    
1.6    LIMITATION OF THE STUDY
The study was carried out under a number of limitations; the time available was grossly in adequate to carry out the research in details the researcher had tried to concentrated\ on areas considered very important. The researcher’s visit to the school library did not prove too useful since most of the text books on accounting in particularly has little or nothing to offer as regards the accounting in the hotels industry. In an attempt by the researcher to get other write ups on accounting in the hotels industry  from  accounting firms proved abortive. Finance of course was yet another constraint on this study. The researcher had problems of running around because of financial constraints cause by inflating trend in fuel prices every day.  Finally, hotel officials were reluctant to make data available because most of the data required were considered delicate and only meant for the sole use of the hotel. However, the above limitation does not in any way affect the validity of the data used in this study.  
1.7     STATEMENT OF HYPOTHESIS
A statistical hypothesis can be defined as “an assumption or statement which may or may not be true concerning one or more population”. (HAWKINGS; 1973; 53). It is a tentative statement about reality that can either be supported or reduced on the basis of collected evidence or relevant information. The above boils down to the fact that statement of hypothesis becomes only accepted evidence. This study seeks to examine the following hypothesis that:
1.      Ho: The success of Savannah suite limited is independent of the activities of the accounting department.
         Ho: The success of Savannah suite limited is independent of the activities on the accounting department.
2.      Ho: The performance of savannah suite limited on the accounting department is  independent of technical support.
          H1: The performance of savannah suite limited on the accounting department is independent of technical support.
3.      Ho: The measurement of profitability and efficiency is independent of the activities of accounting department.
          H1: The measurement of profitability and efficiency is independent of the activities of accounting department.  
1.8    DEFINITION OF TERMS
Here are the meanings of some technical terms that was used:
i.        RECORDING: This the recording of financial transaction, events and situations effecting the unit.
ii.       ANALYZING: This concerns the procedures of separating transaction into parts.
iii.      CLASSIFYING: This involved the categorization of revenues and expenditure into accounts groups according to pre-determined classification code.
iv.      SUMMARIZING: This involved the gathering of transaction data into sub-total and totals in accordance with relevant reporting units of the same classification. This may be done daily, monthly, quartile or annually as the management may specify.
v.       COMMUNICATION: This is the transportation of the outcome of the option on the financial data of a business or government to intended and interested users.
vi.       INTERPRETING: This involves the explanation of the report on the activities and performance of the business or government units which may have been produced in professional or technical Jargons.
vii.      TRANSACTION: This means business activities: such as sales of goods, purchases of goods, payments and receipts of money, the incurring of an expense etc.
viii.      BALANCE SHEET: A statement which presents information about the financial position of an organization at a given point in time.
ix.         ASSETS: The resources which an individuals or organization owns.
x.          CURRENT ASSETS: These are resources acquires for long lasting use rather than for resale at a profit.
xi.          INTANGIBLE ASSETS: These are assets that do not exist physically, (eg good will), but which contribute substantively to the  survival of an organization which owns them.
xii.         CAPITAL: The excess of total assets over total liabilities, funds provides by and belonging to the owners of the business.
xiii.        TURNOVER: This refers to the net, sales, that is the value of goods sold loss returns if any). It may also be refers to as gross earnings.
xiv.        DEPRECIATION: Is the part of the cost of the fixed asset consumed during it’s period of use by the firm.
xv.         LIABILITY: Something owed by he business. (In its boarder definition, liabilities include owner’s capital).
xvi.        CREDITOR: A person or organization to whom the business owns money.
xvii.       DEBTOR: A person or organization owning money to the business.
xviii.      WORKING CAPITAL: The excess of current assets over current liabilities. 

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