CHP Financial Management 2 — Questions and Answers
Question 1: A hotel's GOP (Gross Operating Profit) is calculated by subtracting which expenses from total revenue?
- Departmental expenses only
- Departmental expenses plus undistributed operating expenses (Correct answer)
- Only fixed costs
- Net income taxes and depreciation
Correct answer: Departmental expenses plus undistributed operating expenses
GOP is derived by subtracting both departmental expenses and undistributed operating expenses (administrative, sales, maintenance, utilities) from total revenue.
Question 2: Which financial ratio best measures a hotel's ability to pay short-term obligations?
- Debt-to-equity ratio
- Return on assets
- Current ratio (Correct answer)
- Occupancy percentage
Correct answer: Current ratio
The current ratio (current assets ÷ current liabilities) measures short-term liquidity and the ability to meet near-term financial obligations.
Question 3: A restaurant forecasts $50,000 in food sales and a 32% food cost. What is the projected food cost in dollars?
- $14,000
- $16,000 (Correct answer)
- $18,000
- $20,000
Correct answer: $16,000
$50,000 × 0.32 = $16,000 projected food cost.
Question 4: In hospitality accounting, 'RevPAR' stands for:
- Revenue Per Available Room (Correct answer)
- Revenue Per Actual Rate
- Rate Per Available Room
- Revenue Percentage Above Rate
Correct answer: Revenue Per Available Room
RevPAR (Revenue Per Available Room) equals occupancy percentage multiplied by average daily rate, measuring overall room revenue performance.
Question 5: A hotel purchases $8,000 in supplies but only $5,500 worth is used during the accounting period. What is recorded as an expense?
- $8,000
- $5,500 (Correct answer)
- $2,500
- $13,500
Correct answer: $5,500
Only the $5,500 of supplies consumed is recognized as an expense; the remaining $2,500 stays on the balance sheet as a prepaid asset.
Question 6: Which budgeting approach requires managers to justify every expense from zero each period rather than using prior-year figures as a baseline?
- Incremental budgeting
- Rolling budget
- Zero-based budgeting (Correct answer)
- Flexible budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting starts from a 'zero base' each cycle, requiring justification for all expenditures regardless of historical spending.
Question 7: What does the term 'yield management' primarily aim to maximize in a hotel?
- Guest satisfaction scores
- Revenue from available room inventory (Correct answer)
- Food and beverage profit margins
- Employee productivity
Correct answer: Revenue from available room inventory
Yield management (revenue management) uses demand forecasting and variable pricing to maximize revenue generated from a fixed number of available rooms.
CHP Financial Management 2
A hotel's GOP (Gross Operating Profit) is calculated by subtracting which expenses from total revenue?