1. Which of the following is (are) not reasons for capital investment in a hotel
ID: 330303 • Letter: 1
Question
1. Which of the following is (are) not reasons for capital investment in a hotel business?
a) To comply with local health and safety regulations
b) To buy new kitchen equipment in order to reduce operating costs
c) To increase guest satisfaction scores
d) To add a new floor in order to reach the maximum permitted square meters of built area
e) To build a car park to increase the number of parking spaces available to event guests
2. Which of the following is considered a cash flow but not an income and expense flow?
a) Dividends paid
b) Depreciation expense
c) Provision for Furniture, Fixtures and Equipment reserve
3. Select the missing group of words from this statement about the objectives of capital budgeting.
“A key objective of capital budgeting is to identify the ______ investment outflows, the ________ inflows arising from the ________ and the outflows related _______ to the investment and the achievement of _______.”
a) Total, Maximum, Company, Only, Profits
b) Initial, Maximum, Investment, Only, Inflows
c) Total, Incremental, Company, Specifically, Profits
d) Initial, Incremental, Investment, Specifically, Inflows
4. In addition to the operations budget, which of the following is (are) needed by a hotel finance department in order to prepare an operations cash flow budget?
a) Estimated percentages of trade credit sales
b) Collection experience for credit sales
c) Schedule of loan repayments
d) Estimates of proceeds from sale of fixed assets
e) Payment due dates for settlement of property taxes
f) Payment schedule for utilities
g) None of them
Explanation / Answer
Answer 1: b&d
Answer 2: a
Answer 3: d
Answer 4: a, b,c, d, e
Estimated percentages of trade credit sales
b) Collection experience for credit sales
c) Schedule of loan repayments
d) Estimates of proceeds from sale of fixed assets
e) Payment due dates for settlement of property taxes
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