CVE Financial Management & Budgeting 3

Question 1

A venue executive uses a rolling 12-month forecast updated monthly. What is the primary advantage of this approach over a static annual budget?

Accepted Answer

It provides continuously updated financial visibility

Answer

Rolling forecasts are updated regularly, giving management a current view of financial performance and future expectations.

Question 2

Which cost behavior pattern best describes a venue's catering staffing expense that rises with each additional 50 guests booked?

Accepted Answer

Step-fixed cost

Answer

Step-fixed costs remain constant within a range but jump to a higher level when volume exceeds a threshold, like hiring one more server per 50 guests.

Question 3

A venue signs a multi-year lease. Under accrual accounting, how should the annual lease expense be recognized?

Accepted Answer

Evenly each month over the lease term

Answer

Accrual accounting requires expenses to be recognized in the period they are incurred, so lease costs are spread evenly over the lease term.

Question 4

Which financial ratio measures a venue's ability to meet short-term obligations using only its most liquid assets?

Accepted Answer

Quick ratio

Answer

The quick ratio excludes inventory from current assets, focusing on cash and receivables to assess immediate liquidity.

Question 5

A venue received a $50,000 deposit for an event booked 8 months in advance. How should this be recorded initially?

Accepted Answer

As a liability (deferred revenue)

Answer

Advance deposits are recorded as deferred revenue (a liability) until the event occurs and the performance obligation is fulfilled.

(CVE) Certified Venue Executive Practice Test

(CVE) Certified Venue Executive Practice Test

CVE Financial Management & Budgeting 3