Beauty Business Financial Management and Pricing 4

Question 1

What does 'cash flow' refer to in salon financial management?

Accepted Answer

The movement of money in and out of the business

Answer

Cash flow tracks money coming in and going out over time.

Question 2

A salon offers a 20% discount on a $50 service during a slow weekday. What is the discounted price?

Accepted Answer

$40

Answer

20% of $50 is $10, leaving a $40 price.

Question 3

Which record helps a salon owner prepare an accurate tax return?

Accepted Answer

Detailed income and expense records

Answer

Accurate income and expense records are essential for filing correct taxes.

Question 4

Retail products typically carry a higher profit margin than services because:

Accepted Answer

There is little added labor cost once stocked

Answer

Retail sales add revenue without significant extra labor once the product is on the shelf.

Question 5

A salon owner sets aside 15% of every service payment for future equipment. This practice is best described as:

Accepted Answer

A reserve or savings fund

Answer

Setting money aside for planned expenses builds a reserve fund.

Beauty Business Practice Test