CPS Business Management 3

Question 1

What does 'accounts receivable' represent in a grooming salon's financial records?

Accepted Answer

Money clients still owe the salon for completed services

Answer

Accounts receivable refers to money owed to the business by clients who have received services but have not yet paid.

Question 2

Which business structure offers the owner personal liability protection while still being relatively simple to set up?

Accepted Answer

Limited liability company (LLC)

Answer

An LLC separates the owner's personal assets from business liabilities, providing legal protection while requiring less formality than a corporation.

Question 3

A grooming salon charges $65 for a full groom and spends $20 in variable costs per appointment. What is the contribution margin per groom?

Accepted Answer

$45

Answer

Contribution margin equals revenue minus variable costs; $65 − $20 = $45, which goes toward covering fixed costs and profit.

Question 4

What is a key benefit of building a loyalty rewards program for grooming clients?

Accepted Answer

It increases client retention and repeat booking frequency

Answer

Loyalty programs incentivize clients to return regularly and book more often, increasing customer lifetime value and reducing churn.

Question 5

Which document should a grooming salon require before performing services on a new client's pet?

Accepted Answer

A signed service agreement or intake form with liability waiver

Answer

A signed intake form and liability waiver documents the owner's consent, pet's health history, and protects the business from certain legal claims.

(CPS) Certified Pet Stylist Practice Test