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TRAVEL AGENCY ACCOUNTING

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by

Maria Fe Sainz

on 30 August 2013

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Transcript of TRAVEL AGENCY ACCOUNTING

TRAVEL AGENCY ACC UNTING
A travel agency
is a retail business.

Cash receipts
TRANSACTION PAID FOR:
after entering the month and day in the date columns.
1. Enter the invoice number in the invoice column.
2. Enter the gross amount from the auditor’s coupon in the Cash column.
3. Calculate the commission. Enter the amount in the Agency Commission column.
4. Subtract the agency commission from the gross sale. Enter the result in the Net Amount column and in the Amount Due Column.

Authorized Amount at the end of each report period, total all of the columns, subtracting any bracketed amounts. The total for the Amount Due column is the amount due ARC for distribution to the airlines.
CHAPTER 6
Its primary source of income is from the sale
of airline tickets, hotel accommodation, car rentals,
bus, rail tickets, tours, cruise and travel insurance
An agency receives an average commission
of 10% on all product lines it sells to public

Airline tickets: 8-11% of the base fare

Tours and cruise lines: 5-15%

*some additional overrides or bonuses: 2-5%

A TRAVEL AGENCY
A TRAVEL AGENCY
A TRAVEL AGENCY
GROSS SALES
NET INCOME
PROFIT
JOURNAL
LEDGER
CASH
ACCOUNTS
DISBURSEMENTS
VOUCHERS
RECEIVABLE
Airline commissions are deducted
from—not added to—the tickets price
Revenues from the sale of airline tickets
are payable to the Airlines Reporting Corporation (ARC)

For credit cards transaction— Credit Card Company pays to the airlines

Gross Sales—the total revenue received by the agency

Revenues due to the airlines are deducted from gross sales to determine the Net Income
Net income- operating expenses (overhead)= Profit

Example: Gross Sales: P120,000 in 1 month
Net Income: P12,000
Overhead: P 9,000
Profit: P 3,000

Accurate accounting is required to track and monitor
- revenue and operating expenses
- determine profits
- calculate tax liabilities under states and federal laws

Books of records:

cash receipts
Accounts receivable
ARC Ledger
Cash disbursement
Tax records
Employee records

CASH
CHECK
CREDIT CARDS
Examples of cash receipt:
Journal
Example of a typical Cash Receipt Journal
Accounts Receivable
- refers to sales made to customers with approved credit - usually large corporate accounts.
TWO TYPES OF JOURNAL ENTRY:

a.Debit
- is an amount that is owed to the agency by a customer.
b. Credit
- is a payment received on a customer’s account.

The Arc ledger

Ledger- Used to balance
the accounts of the travel
agency. “Balancing Accounts”

Important Objectives:

-To identify the Agency’s primary sources
-To monitor the performance of each travel agent
-To determine total cash and credit-card sales for the ARC sales report
-To determine total commissions earned by the agency
-To determine the total amount owed to arc

Arc Documents: Airline tickets, refund notices and MCO’s

*Commission – Net price/sale price less tax * % - net price
* net amount – net price minus commission

Cash Sales
Credit-card Transactions after entering the month and day in the Date column.


1. Enter the involve number in the In-voice column.

2. Enter gross amount from the auditor’s coupon in the Credit Card column.

3. Calculate the commission. Enter the amount in the Agency Commission column.

4. Subtract the agency commission from the gross sale. Enter the result in
the Net Amount column-but not in the Amount Due column.

5. Enter the agency commission as a negative number (in brackets) in the Amount Due column.

Employee Record

The following employee records are kept for state and federal tax purposes:

•Income tax withholding

-also called a retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government.

Social Security

- is a concept enshrined in Article 22 of the Universal Declaration of Human Rights which states that Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

Federal Unemployment Tax
- Provides for payments of unemployment compensation to workers who have lost their jobs.

State or other income tax withholding

 Most agencies store these records in Physical files but computers are widely used to maintain electronic files as well.

 Even when information is kept in an electronic file, a physical file must also maintained to store substantiating documents such as tax witholding forms.

CASH DISBURSEMENTS
a payment made by a business for an operating expense.
Most such payments are made by bank check, and thus, most cash disbursements are checks issued for any of the following items:
•Rent
•Payroll
•Social security taxes collected
•Unemployment insurance premiums
•Employee withholding taxes
•Workmen’s compensation insurance
•Disability insurance
•Employee benefits
•Profit sharing
•Union dues
•Utilities
•Telephone expenses
•Business liability insurance
•Legal/accounting fees

EXAMPLE OF A CASH DISBURSEMENT JOURNAL:
VOUCHER
- a bond which is worth a
certain monetary value and which may be spent only for specific reasons or on specific goods.

IN TOURISM:
-Vouchers are used in the tourism sector primarily as proof of a named
customer's right to take a service at a specific time and place.
-A sales receipt representing of a specific component of an itinerary.
-It might be issued for hotel stay, car rental and airport transportation

2 WAYS IN HANDLING VOUCHERS:
1ST: to prepay the service with cash deposit or miscellaneous charges order.
2ND: withhold payment until after service has been performed.

ACCOUNT VOUCHER
-A voucher is an accounting document representing an internal intent to make
a payment to an external entity, such as a vendor or service provider.
-"Payment run" is executed to generate payments corresponding to the unpaid vouchers.

MOBILE PHONES
-A voucher is a recharge number sold to a customer to recharge their SIM card with money and to extend the card's availability period. Vouchers are typically sold at retail outlets
-Vouchers are the prevalent form of recharge for prepaid mobile phones in many countries

INTERNET
-A voucher can also be used online in the form of an e-voucher.
-These types of vouchers can be entered when shopping online and the relevant vouchers value added to your order. It can take the form of any code.

THE END
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