The money arriving in a hotel’s bank account does not always belong in the same period’s room revenue. An advance payment may relate to a future stay, and a cancellation may require a different analysis from a completed booking. ACCA students in Thailand can use this hospitality exercise to practise separating cash collection from performance.
The hotel and transactions are fictional. The case uses simplified IFRS 15 assumptions for teaching, not Thai tax rules, consumer-law advice or a conclusion about which reporting framework applies to a particular hotel. Refund rights and cancellation charges must be read from the actual contract before making a real accounting decision.
Follow one booking across the reporting date
A guest books five nights at THB 3,000 per night, for a total of THB 15,000. The guest pays THB 6,000 before arrival. At the end of the reporting month, none of the nights has been provided. In this example, collecting the THB 6,000 does not by itself establish that room revenue has been earned; the hotel still owes the promised accommodation service.
Assume the booking is a valid contract, each night’s service is delivered evenly, and no other performance obligations complicate the example. After the guest has stayed for two nights, the service provided amounts to THB 6,000. Explain the movement from an advance balance to earned revenue rather than recording the same receipt as revenue twice.
Reconcile cash, accommodation provided and the remaining obligation
Use three separate records: the payment record, the booking agreement and the occupancy or service-delivery record. A bank statement supports the receipt, while the booking identifies what was promised. Evidence that the guest actually stayed helps establish performance.
For a useful worksheet, list booking reference, arrival and departure dates, total agreed consideration, deposits received, services provided by period-end and any remaining balance. This is more informative than a spreadsheet that simply sorts bank receipts by date and calls the total sales.
Treat cancellation as a new question
Now suppose a different guest cancels before arrival. Do not immediately assume that a payment described as a non-refundable deposit is revenue on the day it is received. Investigate the contract, remaining rights and obligations, and the relevant IFRS 15 requirements. The words printed on a payment label cannot replace that assessment.
For a straightforward fictional refund, assume the hotel returns the entire advance before providing any service and no other charge arises. The cash outflow settles the advance balance. It is not automatically a new operating expense simply because money left the bank.
Consider what a package changes
A booking might include accommodation, transport and a separately usable tour. That raises questions about identifying distinct promises and allocating the contract price. Do not copy the simple room-only calculation into a package without reading its terms.
The IFRS Foundation’s overview of IFRS 15 provides the five-step framework, ending in recognition when a performance obligation is satisfied. Use the framework to ask the right questions; a short article cannot determine every outcome for complex hospitality contracts.
Practise the explanation in plain language
Write two sentences for a non-accountant manager: one explaining why receipt of THB 6,000 before arrival is not the same as completed room service, and another explaining why two delivered nights change the position. Then add a separate note naming the contractual information needed for a cancellation case.
This division of evidence, calculation and contract questions produces a stronger answer than treating every deposit alike. It also makes clear exactly which assumptions support the conclusion.
Sources and further study
Explore ASA ACCA courses for your next paper, and check the course page for its current teaching language, syllabus coverage and access terms.