1. What are the main methods of calculating depreciation?

Give suitable examples

to illustrate your answer.
One method of depreciation is the straight line where a specific set percentage is calculated from
the original cost price and then reduced yearly from the assets value.
The second method of depreciation is the reducing balance where a percentage is set but it is
applied on the remaining balance of the cost price each year.
Example
Trader B buys a restaurant business. The building costs 100.00 and the fittings another 50.00.
The depreciation method used for the building is the straight line and the reduced balance is used
for the fittings.
The annual depreciation for the building is 10% and for the fittings is 30%.
Building
Year 1 100,000.00 10% 10,000.00 New book value 90,000.00
Year 2 100,000.00 10% 10,000.00 80,000.00
Year 3 100,000.00 10% 10,000.00 70,000.00
Year 4 100,000.00 10% 10,000.00 60,000.00
Fittings
Year 1 50,000.00 30% 15,000.00 New book value 35,000.00
Year 2 50,000.00 30% 10,500.00 24,500.00
Year 3 50,000.00 30% 7,350.00 17,150.00
Year 4 50,000.00 30% 5,145.00 12,005.00
In the books the previous would be added as:
Building
Year 1
Jan 1 Balance 100,00.00 Dec 31 Depreciation 10,000.00
Balance 90,000.00
100,00.00 100,00.00
Year 2
Jan 1 Balance 90,000.00 Dec 31 Depreciation 10,000.00
Balance 80,000.00
90,000.00 90,000.00
Year 3
Jan 1 Balance 80,000.00 Dec 31 Depreciation 10,000.00
Balance 70,000.00
80,000.00 80,000.00
Year 4
Jan 1 Balance 70,000.00 Dec 31 Depreciation 10,000.00
Balance 60,000.00
70,000.00 70,000.00
Fittings
Year 1
Jan 1 Balance 50,000.00 Dec 31 Depreciation 15,000.00
Balance 35,000.00
50,000.00 50,000.00
Year 2
Jan 1 Balance 35,000.00 Dec 31 Depreciation 10,500.00
Balance 24,500.00
35,000.00 35,000.00
Year 3
Jan 1 Balance 24,500.00 Dec 31 Depreciation 7,350.00
Balance 17,500.00
24,500.00 24,500.00
Year 4
Jan 1 Balance 17,150.00 Dec 31 Depreciation 5,145.00
Balance 12,005.00
17,150.00 17,150.00

2. How does the Front Office staff balance the Visitors Ledger?
The Tab is a record of all sales. Compiling it is the responsibility of people who work in the front
office. Every time a sale of goods or services is completed whether its on credit or debit must be
transferred to the tabular ledger. For example if a guest pays for his accommodation or if he has a
meal on the hotels restaurant and wishes to pay on check out, both of these transactions must be
transferred to the appropriate point in the tabular ledger. Each transaction has its own column on
the ledger. There should be some columns for identification purposes first (for example room
number and name) and then accommodation and separate column for the restaurant etc.
Every hotel has a specific time each day when the tab is closed. Then all charges of the day are done
and accommodation charges for the night are posted. Every sale that happens from that day
forward will belong to the next day to balance the tab.
3. Describe how guests charges are incurred and posted to their account.
Hotel guests incur charges every time they purchase anything or use the hotels services. The
charges could be meals bought in the hotels restaurants, accommodation, phone and internet
charges, shopping done in the hotels shops and use of the hotels services such as the gym or trips
booked via the hotel etc.
Once the charge is incurred they will be passed to the hotel bookkeeping department (if a manual
account system is in place) and added to the guest bill or will be automatically added to the guests'
bill direct from the till or terminal used to enter the charge.
4. Describe a Tab Summary Book.
In order to explain the Tab Summary book first a description of the visitors tabular ledger is
necessary. There are two types of ledgers one Horizontal Tabular Ledger and the other, Vertical
Tabular Ledger. On one side of this ledger, one column is provided to each registered guest and one
column is provided to each registered guest and column is provided for each item of sale of food,
beverages, services etc.
The Tabular sheet contains debit and credit sides. Thus Visitors Tabular Ledger records all aspects
of both debit and credit transaction either on upper and lower sections or on the left and right
section. Such Visitors Tabular Ledger dose not confines itself only to sales but it also includes all
transactions that concern sales. This implies that amount paid by customer against outstanding
debits; allowances and transfer to other ledgers are also recorded. Thus both debit and credit
transactions relating to customers are recorded in their respective columns. In such Tabular ledger
if one column is provided for cash sales, then it can give the picture of total sales of the hotel of the
day.
The completed Visitors Tabular Ledger gives the following information:
a) The sale of each department, total sale of the hotel of a particular day of each type of meal,
beverages and services etc.
b) The total debit balance of a departed guest transferred to ledger account or transferred to other
guests account.
c) Cash paid by guests during the day and allowances given to them.
d) The details of individual customers account and the total owing by resident guests at the close of
the day.
Once the Visitor's tabular ledger has been completed it is presented to accounts. Then the total
(summary) of each business day is added to the Tab Summary book that looks like the tab but also
has additional information about previous years figures for statistics and comparison. The Tab
Summary Book is reconciled weekly and monthly. This book provides the accountants with the
information necessary to create the company's trading accounts (weekly, monthly, quarterly, half -
yearly and yearly), as well as the final accounts and various statistical figures.