CCEP Budget Management 5 — Questions and Answers
Question 1: A non-profit event planner must ensure the event budget complies with IRS rules on unrelated business income. What is the primary concern?
- Keeping registration fees below a fixed dollar amount
- Ensuring event revenue from non-mission activities does not jeopardize tax-exempt status (Correct answer)
- Filing all vendor contracts with the IRS
- Limiting sponsorship amounts to $600 per donor
Correct answer: Ensuring event revenue from non-mission activities does not jeopardize tax-exempt status
Non-profit organizations must monitor unrelated business income (UBIT) because excessive revenue from non-mission activities can threaten tax-exempt status.
Question 2: What is the purpose of establishing a 'budget freeze' policy during the final weeks before an event?
- To allow last-minute vendor upgrades without approval
- To prevent unauthorized expenditures that could disrupt the financial plan (Correct answer)
- To pause all vendor payments until after the event
- To lock in final registration numbers
Correct answer: To prevent unauthorized expenditures that could disrupt the financial plan
A budget freeze restricts new spending commitments close to the event date, ensuring the financial plan remains intact during the high-pressure execution phase.
Question 3: Which tool BEST helps a planner visualize cumulative cash outflows against the event timeline?
- SWOT analysis
- Cash flow projection or S-curve analysis (Correct answer)
- RACI matrix
- Net Promoter Score dashboard
Correct answer: Cash flow projection or S-curve analysis
A cash flow projection or S-curve chart maps when money leaves the organization relative to the event timeline, helping planners manage liquidity.
Question 4: An event's final reconciliation shows actual costs 8% below budget. What should a planner do with unexpended funds?
- Automatically roll them into next year's event budget without reporting
- Return them to the general fund or apply them per organizational policy and document the variance (Correct answer)
- Spend them immediately on post-event celebrations
- Carry them as personal expense reimbursements
Correct answer: Return them to the general fund or apply them per organizational policy and document the variance
Unexpended budget funds must be handled according to organizational policy—typically returned to the general fund—and all variances must be documented for financial transparency.
Question 5: A planner is evaluating whether to outsource event registration management or handle it in-house. This is called:
- Break-even analysis
- Make-or-buy analysis (Correct answer)
- Cost-benefit ratio calculation
- Sunk cost evaluation
Correct answer: Make-or-buy analysis
Make-or-buy analysis compares the total cost of performing a function internally versus outsourcing it to an external vendor.
Question 6: Which payment schedule provision BEST protects an event planner's cash flow when contracting with a venue?
- Paying the full invoice immediately upon contract signing
- Negotiating milestone-based payments tied to event deliverables (Correct answer)
- Requiring the venue to invoice only after the event concludes
- Splitting all payments equally across 12 months regardless of timeline
Correct answer: Negotiating milestone-based payments tied to event deliverables
Milestone-based payment schedules align cash outflows with the receipt of agreed services, protecting the planner's liquidity and reducing upfront financial risk.
Question 7: A planner identifies a 'sunk cost' in the event budget. How should sunk costs influence future spending decisions?
- They should be the primary factor in all subsequent budget decisions
- They should be ignored because they cannot be recovered regardless of future actions (Correct answer)
- They must be recouped by increasing registration fees
- They should be reported to sponsors as a loss
Correct answer: They should be ignored because they cannot be recovered regardless of future actions
Sunk costs are irretrievable past expenditures and should not influence future decisions, which should be based solely on expected future costs and benefits.
CCEP Budget Management 5
A non-profit event planner must ensure the event budget complies with IRS rules on unrelated business income.
What is the primary concern?