Practice Test Geeks(ABA) American Barber Association Certified Practice Test
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Barbershop Business & Finance Flashcards

7 cards from real ABA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Barbershop Business & Finance flashcards as text

  1. What is the difference between gross revenue and net revenue for a barbershop?

    Answer: Gross revenue is total income before deductions; net revenue is income after refunds and discounts

    Gross revenue is the total amount earned before any deductions, while net revenue is what remains after subtracting returns, discounts, and allowances.

  2. A barbershop owner wants to expand by opening a second location. Which financing option transfers partial ownership in exchange for capital?

    Answer: Equity financing

    Equity financing involves selling a portion of business ownership to an investor in exchange for capital, unlike debt financing which must be repaid.

  3. Which business structure offers its owners limited personal liability while allowing pass-through taxation?

    Answer: Limited Liability Company (LLC)

    An LLC protects members from personal liability for business debts while profits and losses pass through to members' personal tax returns.

  4. What is 'accounts receivable' in the context of a barbershop that offers corporate accounts?

    Answer: Money owed to the barbershop by clients or companies for services already rendered

    Accounts receivable represents money clients owe the business for services already completed but not yet paid.

  5. When a barber purchases a barber chair for $1,500, how is this cost typically recorded on financial statements?

    Answer: As a capital asset subject to depreciation

    Equipment purchases are capitalized as assets and depreciated over their useful life rather than expensed all at once in the year of purchase.

  6. Which key performance indicator (KPI) measures the average revenue generated per client visit?

    Answer: Average ticket value

    Average ticket value is calculated by dividing total revenue by the number of client visits, indicating how much each customer spends per appointment.

  7. A barbershop owner sets aside 30% of all revenue into a separate account to cover quarterly estimated taxes. This practice is an example of:

    Answer: Tax reserve planning

    Tax reserve planning involves proactively setting aside funds throughout the year to meet estimated self-employment and income tax obligations.