CFD Financial Management & Budgeting 5

Question 1

A floral designer is deciding whether to purchase a delivery van outright or lease it. Which financial factor most favors leasing?

Accepted Answer

Preserving working capital for operations

Answer

Lower total lifetime cost

Answer

Building equity in the asset

Answer

Eliminating maintenance costs

Question 2

What is 'shrinkage' in the context of a floral shop's financial management?

Accepted Answer

Loss of inventory due to spoilage, theft, or damage

Answer

Reduction in customer orders during off-season

Answer

Decline in retail flower prices

Answer

Decrease in staff hours

Question 3

Which of the following best describes 'working capital' for a floral business?

Accepted Answer

Current assets minus current liabilities

Answer

Total long-term assets minus liabilities

Answer

Annual revenue minus annual expenses

Answer

Equipment value minus depreciation

Question 4

A florist notices her Valentine's Day revenue spikes 400% but January and March are very slow. Which financial strategy best manages this seasonal cash flow challenge?

Accepted Answer

Build a cash reserve during peak seasons to cover slow periods

Answer

Increase prices year-round

Answer

Reduce product offerings during peak season

Answer

Take out a loan each slow season

Question 5

Which cost does NOT change regardless of how many floral arrangements a shop produces in a month?

Accepted Answer

Monthly shop lease payment

Answer

Fresh flower costs

Answer

Packaging materials

Answer

Freelance labor for events

Question 6

A floral designer is preparing a proposal for a 300-guest gala. The client asks for a 'not-to-exceed' budget cap. How should this affect the florist's approach?

Accepted Answer

Design arrangements that maximize impact within the stated budget ceiling

Answer

Propose the highest-quality flowers regardless of cost

Answer

Decline the event if the cap seems low

Answer

Ignore the cap and adjust the invoice afterward

Question 7

When a floral business depreciates a $12,000 walk-in cooler over 5 years using straight-line depreciation, what is the annual depreciation expense?

Accepted Answer

$2,400

Answer

$1,200

Answer

$2,000

Answer

$3,000