Beauty Business Beauty Business Financial Management and Pricing Questions and Answers 2

Question 1

What is the term for the total revenue remaining after subtracting the cost of goods sold in a beauty salon?

Accepted Answer

Gross profit

Answer

Gross profit is calculated by subtracting cost of goods sold from total revenue.

Question 2

A salon owner wants to ensure each service covers its costs and contributes to overhead — which pricing method sets prices based on total cost plus a desired profit margin?

Accepted Answer

Cost-plus pricing

Answer

Cost-plus pricing adds a markup percentage to the total cost of delivering a service.

Question 3

Which financial document provides a snapshot of a beauty business's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

A balance sheet lists assets, liabilities, and owner's equity as of a specific date.

Question 4

When a beauty business offers a lower introductory price for a new treatment to attract clients quickly, this is known as what pricing strategy?

Accepted Answer

Penetration pricing

Answer

Penetration pricing uses low initial prices to rapidly build a client base for a new service.

Question 5

What key financial metric measures how efficiently a salon uses its inventory by calculating how many times stock is sold and replaced over a period?

Accepted Answer

Inventory turnover ratio

Answer

Inventory turnover ratio shows how many times inventory is sold and restocked during a given period.

Beauty Business Practice Test

Beauty Business Practice Test

Beauty Business Beauty Business Financial Management and Pricing Questions and Answers 2