CVPM Financial Management and Budgeting 3

Question 1

What is the primary purpose of a cash flow forecast in a veterinary practice?

Accepted Answer

To predict when the practice may face cash shortages or surpluses

Answer

To determine the practice's net worth

Answer

To calculate annual tax liability

Answer

To measure profitability relative to competitors

Question 2

A veterinary practice charges $250 for a dental cleaning. Variable costs are $75 and fixed costs allocated per procedure are $100. What is the contribution margin?

Accepted Answer

$175

Answer

$75

Answer

$150

Answer

$250

Question 3

Which financial document summarizes a practice's revenues, expenses, and net income over a specific time period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Statement of cash flows

Answer

Trial balance

Question 4

When a veterinary practice leases equipment rather than purchasing it, which financial impact is most likely?

Accepted Answer

Improved short-term cash flow preservation

Answer

Higher depreciation expense on the balance sheet

Answer

Increased asset ownership on the balance sheet

Answer

Reduced total long-term cost

Question 5

What does the term 'working capital' represent in a veterinary practice's financial management?

Accepted Answer

Current assets minus current liabilities

Answer

Total assets minus total liabilities

Answer

Cash plus accounts receivable

Answer

Annual revenue minus annual expenses

Question 6

A practice manager notices that drug costs as a percentage of revenue have increased from 18% to 24% over six months. Which action should be investigated first?

Accepted Answer

Reviewing inventory control procedures and potential drug diversion

Answer

Increasing client fees immediately

Answer

Hiring additional pharmacy staff

Answer

Reducing the number of drugs stocked

Question 7

Which type of budget variance occurs when actual revenue is higher than budgeted revenue?

Accepted Answer

Favorable variance

Answer

Unfavorable variance

Answer

Adverse variance

Answer

Neutral variance