Uniform system of accounts

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Uniform systems of accounts are standardized charts of accounts developed to reflect the specific operating and financial characteristics of individual hospitality industry segments. The USALI is by far the most widespread in its use, in part because it brings order to the complexity inherent in the numerous revenue and cost centers comprising a multifaceted lodging property, but the Uniform System of Accounts for Restaurants (USAR) and the Uniform System of Accounts for Clubs (USAC) are also widely used.

Uniform systems of accounts are designed to meet four distinct yet overlapping objectives:

1. Comparability. Because uniform systems provide carefully developed formats reflecting evolving operating and financing trends in their segments, the comparisons of financial results among adopters’ operations are more reliable.

2. Responsibility Accounting. Uniform systems distinguish between direct and indirect costs, thus permitting the assignment of costs to the activities and their managers.

A direct cost is an expense that is readily and reliably assigned to a revenue generating activity or a cost center. In the USALI, for example, the cost of food sold is readily identified if appropriate record keeping procedures are followed, and it can reliably be assigned as a cost of generating food sales. Similarly, payroll and related expenses of both revenue centers (e.g., rooms department, food and beverage department) and cost centers (e.g., marketing, property operations, and maintenance) are direct costs because they are the responsibility of individual revenue and cost center managers.

An indirect cost is an expense that cannot be readily and reliably assigned to a revenue generating activity. For example, under the USALI, no cost of sales is assigned to the rooms division. Obviously, significant costs are incurred to generate the sale of room nights, but assigning the brick and mortar (and other) costs of generating the rooms department revenue would:

1) violate the objective of responsibility accounting, since the rooms division manager does not control the size of the rooms division (or its marketing budget) and

2) require the use of subjective allocation bases. Indirect costs are thus considered overhead costs, or burden. Under the USALI, operating overhead costs are termed undistributed operating expenses, while occupancy and financial overhead costs are termed fixed charges.

3. Adherence to Accounting Standards. Careful use of uniform systems helps to ensure that property level accounting personnel are reporting transactions according to Generally Accepted Accounting Principles (GAAP).

4. Flexibility. Uniform systems typically contain far more classifications and accounts than are used by most adopters, but this feature permits individual operations to customize the system to their needs while preserving comparability and accuracy.

Efficient systems of accounts summarize operating results succinctly, relegating more detailed information on revenues and costs to depart mental schedules. This yields an uncluttered, more usable picture of operating performance while preserving a ‘drill down’ capability if greater detail is needed. Similarly, expense dictionaries provide users with guidance by categorizing into their appropriate departmental schedules the myriad transactions a hospitality operation records.

Although most adopters seek above all to generate operating statements that permit performance comparisons, uniform systems of accounts provide guidance on the presentation of other financial statements, including: the balance sheet, statement of owners’ equity, and the statement of cash flow. The evolution of ownership entities, changing operating characteristics, and evolving accounting standards require periodic revision of the guidelines for presenting the financial data for the industry’s various sectors.

Finally, although the above discussion emphasizes the record keeping function, an effective uniform system also provides analytical guidance. This might include procedures for the application of standard managerial accounting tools, e.g., ratio analysis, cost volume profit analysis, operational budgeting and budgetary control, allocation and apportionment of expenses (responsibility accounting) to the hospitality segment.


Schmidgall, R. S. (2002). Hospitality Industry Managerial Accounting (5th ed.). East Lansing, (MI): Educational Institute of the American Hotel and Lodging Association.

Club Managers Association of America (1996). Uniform System of Accounts for Clubs. WA: Club Managers Association of America.

National Restaurant Association (1996). Uniform System of Accounts for Restaurants (7th ed.). WA: National Restaurant Association.

Educational Institute of the American Hotel and Motel Association (1996). Uniform System of Accounts for the Lodging Industry (9th ed.). East Lansing, (MI): Educational Institute of the American Hotel and Motel Association.

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