CET CET Budget & Financial Management 1 — Questions and Answers
Question 1: Which budgeting approach starts from zero and requires justification for every line item regardless of prior year spending?
- Incremental budgeting
- Zero-based budgeting (Correct answer)
- Top-down budgeting
- Rolling forecast budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting requires every expense to be justified from scratch, eliminating the assumption that prior expenditures are automatically valid.
Question 2: In event financial management, a 'contingency fund' is BEST defined as:
- Money set aside for staff bonuses after the event
- A budget reserve allocated for unexpected costs or emergencies (Correct answer)
- Funds earmarked for marketing the event post-production
- Revenue projected from event sponsorships
Correct answer: A budget reserve allocated for unexpected costs or emergencies
A contingency fund is a pre-planned financial buffer, typically 10–15% of the total budget, reserved for unforeseen expenses.
Question 3: What does 'return on investment' (ROI) measure in the context of an experiential event?
- The number of social media impressions generated
- The financial and strategic value gained relative to the cost of the event (Correct answer)
- The satisfaction score from the post-event survey
- The percentage of attendees who registered early
Correct answer: The financial and strategic value gained relative to the cost of the event
ROI measures whether the outcomes of the event—revenue, leads, brand value—justify the resources invested in producing it.
Question 4: Which cost classification describes expenses that remain constant regardless of the number of event attendees?
- Variable costs
- Direct costs
- Fixed costs (Correct answer)
- Marginal costs
Correct answer: Fixed costs
Fixed costs—such as venue rental, staging, and AV—do not change based on attendance numbers.
Question 5: A 'purchase order' (PO) in event management serves primarily to:
- Confirm attendee registrations
- Authorize and document a transaction with a vendor before payment is made (Correct answer)
- Summarize post-event financial results
- Request a refund from a supplier
Correct answer: Authorize and document a transaction with a vendor before payment is made
A purchase order is a formal document issued to a vendor that approves a specific purchase and its terms before the transaction occurs.
Question 6: When comparing bids from multiple vendors, what is the MOST important factor beyond cost?
- The vendor's social media following
- Value delivered relative to price, including quality, reliability, and scope (Correct answer)
- Whether the vendor has worked with competitors
- The length of the vendor's company history
Correct answer: Value delivered relative to price, including quality, reliability, and scope
The best vendor selection balances cost against the total value delivered, including quality, dependability, and comprehensive service scope.
CET CET Budget & Financial Management 1
Which budgeting approach starts from zero and requires justification for every line item regardless of prior year spending?