About this Module
In this module, learners will be able to analyse the nature of accounting and accounting concepts and interpret financial statements for an entity as part of the business process. This will be used in supporting business effectiveness and informing decision-making in tourism organisations. This practical component serves as an introduction to accounting principles.
Every business needs to make money. To make money you need to manage your money. You need to know where it comes from and where it is going. This module will give you the broad knowledge and skills to manage your own finances or that of a small business, and may even encourage you to become an accountant!
Past students have gone on to further accounting study whilst others have secured jobs where they found their accounting knowledge useful, for example, doing the daily banking at a hotel. The production and presentation of business information will give you valuable skills that can be used in all business departments and workplace environments.
Details
| Expected Duration | 150 hours |
|---|---|
| Credits | 15 |
| Level | 5 |
| Assessments | 2 |
Outcomes
| Graduate Profiles | Learning Outcomes | Assessment |
|---|---|---|
|
GPO 3 Analyse and evaluate local, national, and international tourism operating environments to facilitate rational decision-making in the tourism industry |
LO4.1 Analyse concepts and elements of accounting and financial management processes and their application in the facilitation of business decision-making (5 Cr) |
Written assessment Event 1 - Explain concepts and elements of accounting processes in supporting business decision-making |
|
GPO 4 Develop, analyse, and critique tourism business systems and processes to enable the delivery of a high-quality visitor experience and contribute to overall business effectiveness. |
LO 4.2 Apply knowledge of accounting and financial statements to interpret tourism business performance and to make recommendations for business financial sustainability (10 Cr) |
Case study
Event 2 - Learners will apply accounting and financial knowledge to interpret the performance of the tourism business and make recommendations for business financial sustainability |
Important
Key Resource
For this Module Online, we have included a copy of the Trainer Resource. The main reason for including this resource is so that you can have a look at your answers for the learning activities and see if you are on the right track. We believe this will add value to your learning and help you understand online content. Please download a copy for your reference and to check your answers.
This module serves as an introduction to accounting principles and is quite practical in nature, i.e. manual bookkeeping. You will have the opportunity to practice through many exercises and experience what it is like to be responsible for finances.
Important
During this module, you will come across new words and terms. To help your understanding we have included a glossary:
A glossary is a collection of words pertaining to a specific topic. You can refer back to this document at any time, or even download a copy here.
What is accounting?
To “account” for something means to give a justifying analysis or explanation (Merriam Webster dictionary). Therefore, ‘financial accounting’ is the explanation of financial events. It explains:
- What happened
- When it happened
- Why it happened
- What the consequences were.
We call financial events ‘transactions’.
The Function and Purpose of Accounting
Tourism is a business. Businesses only make money if they are managed correctly, and a large part of that management is behind the scenes. Management needs to make sure that the company’s processes are as efficient as possible in terms of knowing where all the money is being spent.
For this reason, it is important to be able to understand the nature of accounting and accounting concepts, explain and classify transactions according to their effect on the expanded accounting equation, and prepare financial statements as part of the business process of tourism.
Accounting provides crucial financial information that helps businesses make informed decisions. It allows managers to analyse the financial health of a company, assess profitability, identify cost-saving opportunities, and allocate resources effectively.
The information prepared by the accountant is made available to people who have an interest in the business. These people are called stakeholders. The type of information provided by the accountant depends on the individual needs of these stakeholders.
User types include:
- Directors / owners
- Shareholders & stakeholders (other stakeholders)
- Management
- Potential investors
- Creditors (someone we owe money to)
- Government
- The general public.
Internal Users
Internal users include:
Directors / Owners / Shareholders
The owner provides the initial funds (capital) into the business, so they are interested in the return on their funds and also, the financial stability of the business. Therefore, they need information on how much the business has earned (profits) and if it can pay its bills when they are due.
Managers
There are different levels of managers, and each manager will need different information. They include:
- Senior management wants information that shows how their policy decisions have affected the business performance. This enables them to make new policy decisions for the future.
- Middle management wants information on the performance of their departments (marketing, finance, production, etc.) and how effective and efficient they have been in carrying out the policy decisions of top management.
- Lower management wants information to see how their segments are performing. Lower management has decisions to make in the day-to-day running of the business. They will be looking at current staff management (should they increase/decrease staff), budgetary comparisons (how to reduce expenditure/increase revenue), and controlling assets and liabilities. They need both ‘segmented’ and ‘total’ information to see how they fit into the overall picture.
Employees
Employees are concerned about the performance of the business and its prospects as they want to know about their future job security. They will also be interested in this information so that they can assess the ability of the business to pay salaries, retirement benefits, and if there is a potential for salary increases in the future.
External Users
External users include:
- Creditors who provide goods and services to the business so they are concerned about the financial stability of the business and whether it can pay its bills on time. They will focus on the liquidity of the business.
- Lenders including financial institutions such as banks will need information on the financial stability of the business so as to assess whether the business will be able to pay back their loans and interest when it is due and also to decide whether to lend more money to the business in the future.
- Potential investors are people who are considering investing in the business (buying shares). They will need information on financial stability and return on investment. Of course, they will also want to know about profitability and measures of performance management. They will use all this information to help them decide whether or not to invest in the business.
- Governments and their agencies such as IRD (the taxation department), will be interested to see the profit of the business and how the business values its assets, and the allocation of resources, for tax purposes. Statistics NZ will be interested in various data such as sales levels, profits, investments, and so on. This information is used in setting policies for managing the economy.
- Customers are concerned with the viability of a business, especially when they have a long-term involvement with, or are dependent on, the business for its products.
- The general public and other interested parties - people in the local community may use financial statements to get information about the trends/recent developments in the prosperity of the business and the range of its activities as they affect their area. Neighbouring businesses, competitors, etc., might want information on excessive profits, overseas ownership, and so on. The general public will also be interested in how well the business is using its resources and what it is doing to maintain the quality of life in relation to pollution control, recycling, and replacement of resources.
Remember to refer to your downloaded glossary of terms to act as a reminder for this task.
