CCEP Budgeting & Financial Management 3 — Questions and Answers
Question 1: Which budgeting method builds the budget from zero each cycle, requiring justification for every line item regardless of prior year spending?
- Incremental budgeting
- Zero-based budgeting (Correct answer)
- Activity-based budgeting
- Rolling budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting starts from a 'zero base' each period, requiring managers to justify all expenditures anew rather than simply adjusting prior figures.
Question 2: A sponsor provides $15,000 in cash and $5,000 in in-kind services for an event. How should in-kind contributions typically be treated in the budget?
- Excluded entirely since no cash changes hands
- Recorded as both revenue and expense at fair market value (Correct answer)
- Listed only as a cost offset on the expense side
- Reported only in supplemental notes, not in the main budget
Correct answer: Recorded as both revenue and expense at fair market value
In-kind contributions should be recorded as both revenue (sponsorship income) and expense (the service or product received) to accurately reflect total event value.
Question 3: What does 'accounts payable' represent in event financial management?
- Money owed to the organization by attendees
- Money the organization owes to vendors for services rendered (Correct answer)
- Pre-paid deposits held by the venue
- Sponsorship revenue not yet received
Correct answer: Money the organization owes to vendors for services rendered
Accounts payable are short-term liabilities representing amounts owed to external vendors and suppliers for goods or services already received.
Question 4: A conference generates $200,000 in revenue and has $160,000 in total expenses. What is the profit margin?
- 15%
- 20% (Correct answer)
- 25%
- 80%
Correct answer: 20%
Profit margin = (Revenue − Expenses) / Revenue × 100 = ($200,000 − $160,000) / $200,000 × 100 = 20%.
Question 5: Which of the following is an example of a variable cost in event budgeting?
- Venue rental fee
- Per-person meal cost (Correct answer)
- Speaker honorarium
- Event management software subscription
Correct answer: Per-person meal cost
Per-person meal costs increase or decrease directly with attendance, making them a variable cost that scales with event size.
Question 6: When should an event planner present a post-event financial reconciliation report to stakeholders?
- Before the event debrief meeting to inform discussions
- Within 30–60 days after the event when all invoices are settled (Correct answer)
- One year after the event for tax filing purposes
- Only if there is a budget surplus to report
Correct answer: Within 30–60 days after the event when all invoices are settled
Post-event reconciliation should occur once all vendor invoices are received and paid, typically within 30–60 days, to provide an accurate financial close.
Question 7: A planner is negotiating AV services and receives a quote 30% above budget. Which negotiation tactic is MOST appropriate?
- Immediately reject the vendor and find another
- Request an itemized quote and identify services that can be reduced or eliminated (Correct answer)
- Agree to the price and cut the contingency fund
- Ask the venue to cover the difference
Correct answer: Request an itemized quote and identify services that can be reduced or eliminated
Requesting an itemized breakdown allows the planner to identify cost drivers and selectively remove or downgrade non-essential services to align with the budget.
CCEP Budgeting & Financial Management 3
Which budgeting method builds the budget from zero each cycle, requiring justification for every line item regardless of prior year spending?