Financial Management & Revenue Control Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management & Revenue Control flashcards as text
A parking facility's rate elasticity study finds that a 10% rate increase results in a 15% drop in daily transient volume. This demand is classified as:
Answer: Elastic, meaning revenue will decrease with the rate increase
When the percentage change in quantity demanded exceeds the percentage change in price (|elasticity| > 1), demand is elastic and total revenue falls if prices rise.
Monthly permit revenue is best classified on a parking income statement as:
Answer: Deferred revenue until each day of the permit period passes
Under accrual accounting, monthly permit fees are recognized ratably over the permit period, with unearned amounts carried as deferred revenue on the balance sheet.
Which ratio measures how efficiently a parking operation converts revenue into net operating income, comparable to an 'operating margin'?
Answer: NOI margin (NOI ÷ Gross Revenue)
The NOI margin shows what percentage of each revenue dollar becomes net operating income after paying operating expenses, directly reflecting operational efficiency.
A parking authority is comparing two rate structures: flat rate ($5 all day) vs. hourly rate ($2/hr, max $10). Which analysis determines which structure yields higher revenue?
Answer: Average length of stay analysis combined with transaction volume data
Average length of stay data reveals whether most customers park briefly (favoring hourly) or all day (favoring flat rate), directly determining which structure maximizes yield.
A parking fund's reserve account is designed primarily to:
Answer: Cover major capital repairs or revenue shortfalls without additional borrowing
Reserve funds in parking (maintenance reserves, debt service reserves) are held to fund large periodic capital expenditures or buffer against revenue downturns without triggering debt covenant violations.
When auditing a parking facility's revenue control system, an auditor finds that exit transaction counts exceed entrance counts by 3%. This discrepancy most likely indicates:
Answer: Gate or sensor malfunction causing phantom exit records
Exits exceeding entrances points to equipment malfunction (stuck sensors, gate bounce) or system errors that generate false exit records, requiring immediate investigation.
Which method is most appropriate for allocating shared overhead costs (administration, security) across multiple parking facilities operated by one authority?
Answer: Cost allocation based on each facility's share of total revenue or transactions
Allocating shared costs proportionally to revenue or transaction volume provides the most equitable and meaningful picture of each facility's true profitability.