CET CET Budget & Financial Management 1

Question 1

Which budgeting approach starts from zero and requires justification for every line item regardless of prior year spending?

Accepted Answer

Zero-based budgeting

Answer

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:

Accepted Answer

A budget reserve allocated for unexpected costs or emergencies

Answer

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?

Accepted Answer

The financial and strategic value gained relative to the cost of the event

Answer

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?

Accepted Answer

Fixed costs

Answer

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:

Accepted Answer

Authorize and document a transaction with a vendor before payment is made

Answer

A purchase order is a formal document issued to a vendor that approves a specific purchase and its terms before the transaction occurs.

CET - Certified Experiential Specialist Practice Test