Funeral Service Test Funeral Home Business Management and Operations 2 — Questions and Answers
Question 1: A funeral home's cash advance items on the Statement of Funeral Goods and Services represent which of the following?
- Goods the funeral home manufactures in-house
- Third-party fees paid on behalf of the family (Correct answer)
- Discounts applied to funeral packages
- Insurance policy proceeds
Correct answer: Third-party fees paid on behalf of the family
Cash advance items are fees paid by the funeral home to third parties on the family's behalf, such as obituary notices, flowers, or death certificates.
Question 2: In a preneed funeral contract, which type transfers full ownership and control of the funds to an irrevocable trust?
- Revocable preneed contract
- Irrevocable preneed contract (Correct answer)
- Portable preneed contract
- Insurance-funded preneed contract
Correct answer: Irrevocable preneed contract
An irrevocable preneed contract places funds in a trust that cannot be withdrawn by the purchaser and may qualify them for Medicaid asset exclusion.
Question 3: Which law primarily governs the portability of preneed funeral contracts when a family moves to another state?
- State preneed statutes (Correct answer)
- The FTC Funeral Rule
- OSHA 29 CFR 1910.1030
- The Uniform Disposition of Community Property Act
Correct answer: State preneed statutes
Preneed portability is governed by individual state statutes, and portability rights vary widely from state to state.
Question 4: What is the term for the process of transferring a preneed funeral contract from one funeral home to another at the consumer's request?
- Novation
- Assignment
- Portability transfer (Correct answer)
- Contract substitution
Correct answer: Portability transfer
Portability transfer refers to the consumer's right to move a preneed contract to a different funeral provider, subject to state law.
Question 5: A funeral home operating as a sole proprietorship means the owner bears which type of liability?
- Limited liability
- No personal liability
- Unlimited personal liability (Correct answer)
- Corporate liability only
Correct answer: Unlimited personal liability
In a sole proprietorship, the owner has unlimited personal liability, meaning personal assets can be used to satisfy business debts.
Question 6: Which financial statement shows a funeral home's revenues and expenses over a specific accounting period?
- Balance sheet
- Income statement (Correct answer)
- Cash flow statement
- Statement of retained earnings
Correct answer: Income statement
The income statement (profit and loss statement) summarizes revenues and expenses for a specific period to show net income or loss.
Funeral Service Test Funeral Home Business Management and Operations 2
A funeral home's cash advance items on the Statement of Funeral Goods and Services represent which of the following?