CET CET Budget & Financial Management 2 — Questions and Answers
Question 1: Which financial document provides a real-time comparison of budgeted versus actual event expenditures?
- Invoice register
- Budget-to-actual report (Correct answer)
- Cash flow projection
- Balance sheet
Correct answer: Budget-to-actual report
A budget-to-actual report shows variance between planned and real spending, allowing planners to identify and address overruns immediately.
Question 2: In event contracts, 'attrition' most commonly refers to:
- Staff turnover during event production
- A penalty charged when a client fails to meet a minimum room block or attendance guarantee (Correct answer)
- The natural reduction in attendee energy over a multi-day event
- Cancellation of a keynote speaker
Correct answer: A penalty charged when a client fails to meet a minimum room block or attendance guarantee
Attrition clauses require clients to pay a penalty if they don't meet minimum commitments for hotel rooms or food and beverage minimums.
Question 3: What is the primary purpose of collecting a deposit from a client before an event?
- To fund the planner's personal expenses during production
- To secure the commitment and provide working capital for vendor deposits and early expenses (Correct answer)
- To cover post-event staff gratuities
- To establish the client's credit rating
Correct answer: To secure the commitment and provide working capital for vendor deposits and early expenses
A client deposit confirms the engagement, reduces financial risk for the planner, and funds necessary upfront vendor payments.
Question 4: Which of the following is an example of a variable cost in event budgeting?
- Venue rental fee
- Per-person catering cost (Correct answer)
- Stage and lighting rental
- Event management software subscription
Correct answer: Per-person catering cost
Per-person catering costs increase or decrease directly in proportion to the number of attendees, making them a variable cost.
Question 5: What does 'cost per attendee' (CPA) help an event planner determine?
- The average salary of event staff
- The efficiency and scalability of the event's budget relative to attendance (Correct answer)
- The number of vendors needed per event
- The venue's capacity utilization rate
Correct answer: The efficiency and scalability of the event's budget relative to attendance
CPA divides total event costs by the number of attendees, revealing the per-person investment and enabling comparison across events.
Question 6: Which risk does event cancellation insurance MOST directly protect against?
- Low social media engagement post-event
- Financial losses resulting from having to cancel or postpone the event due to covered circumstances (Correct answer)
- Vendor price increases during planning
- Negative press coverage
Correct answer: Financial losses resulting from having to cancel or postpone the event due to covered circumstances
Event cancellation insurance reimburses non-recoverable costs when an event must be cancelled or postponed due to circumstances covered by the policy.
CET CET Budget & Financial Management 2
Which financial document provides a real-time comparison of budgeted versus actual event expenditures?