CVE Venue Financial Management 2 — Questions and Answers
Question 1: Which financial statement shows a venue'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) reports revenues and expenses over a defined period to show net income or loss.
Question 2: A venue's fixed costs total $80,000/month and variable costs are $15 per attendee. If 2,000 attendees are expected, what is the break-even revenue needed?
- $80,000
- $110,000 (Correct answer)
- $95,000
- $30,000
Correct answer: $110,000
Break-even revenue = Fixed costs + (Variable cost × attendees) = $80,000 + ($15 × 2,000) = $110,000.
Question 3: What is the primary purpose of a rolling forecast in venue financial planning?
- To replace the annual budget entirely
- To continuously update projections based on actual performance (Correct answer)
- To track daily cash deposits
- To audit payroll expenses
Correct answer: To continuously update projections based on actual performance
A rolling forecast updates financial projections on a regular cycle, incorporating recent actuals to improve planning accuracy.
Question 4: Which cost classification best describes the wages paid to event-day security staff hired per event?
- Fixed cost
- Sunk cost
- Variable cost (Correct answer)
- Overhead cost
Correct answer: Variable cost
Per-event security wages vary directly with the number of events held, making them a variable cost.
Question 5: A venue collects $500,000 in event deposits for future bookings. On the balance sheet, these deposits are recorded as:
- Revenue
- Accounts receivable
- Deferred revenue (liability) (Correct answer)
- Owner's equity
Correct answer: Deferred revenue (liability)
Deposits for future services are deferred revenue — a liability — until the event is actually held and the obligation is fulfilled.
Question 6: What does the term 'contribution margin' represent in venue financial analysis?
- Total revenue minus all fixed costs
- Revenue minus variable costs per unit (Correct answer)
- Net profit after taxes
- Total operating expenses
Correct answer: Revenue minus variable costs per unit
Contribution margin = revenue minus variable costs, showing how much each sale contributes toward covering fixed costs and generating profit.
Question 7: Which method of depreciation results in higher depreciation expense in the early years of an asset's life?
- Straight-line depreciation
- Units-of-production depreciation
- Accelerated (double-declining balance) depreciation (Correct answer)
- Sum-of-years-digits only applies to tax law
Correct answer: Accelerated (double-declining balance) depreciation
Double-declining balance is an accelerated method that allocates more depreciation expense to the early years of an asset's useful life.
CVE Venue Financial Management 2
Which financial statement shows a venue's revenues and expenses over a specific accounting period?