Financial Planning & Budgeting Flashcards
7 cards from real RCS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Planning & Budgeting flashcards as text
A cleaning business owner wants to save for equipment replacement. Which financial tool is most appropriate for this goal?
Answer: Sinking fund or capital reserve account
A sinking fund or capital reserve account involves regularly setting aside money specifically to replace equipment when it wears out.
When calculating the true cost of hiring an employee in a cleaning business, which additional cost must be factored in beyond base wages?
Answer: Employer payroll taxes and benefits
Employer costs include payroll taxes (Social Security, Medicare, unemployment) plus any benefits, typically adding 20-30% on top of gross wages.
A cleaning company's revenue grew 20% but net profit stayed flat. What is the most likely explanation?
Answer: Operating expenses grew at the same rate as revenue
If expenses rise at the same pace as revenue, profit margins remain unchanged even as total revenue increases.
What is the recommended minimum number of months of operating expenses a cleaning business should keep in an emergency fund?
Answer: 3 months
Most financial advisors recommend maintaining at least 3 months of operating expenses as a cash reserve to handle slow periods or unexpected costs.
A cleaning business charges $150 for a deep clean and $80 for a standard clean. If the owner completes 10 deep cleans and 20 standard cleans in a month, what is total revenue?
Answer: $3,100
(10 × $150) + (20 × $80) = $1,500 + $1,600 = $3,100.
Which of the following best describes the concept of 'overhead' in a residential cleaning business?
Answer: Indirect fixed costs not tied to a specific job, such as insurance and office expenses
Overhead refers to ongoing business expenses that are not directly linked to individual cleaning jobs, such as insurance, vehicle costs, and administrative fees.
A residential cleaning business wants to expand and needs financing. Which option involves no repayment obligation but may require giving up partial ownership?
Answer: Equity investment
Equity investment provides capital in exchange for an ownership stake in the business, with no required repayment like a loan.