Practice Test Geeks(CCP) Certified Cosmetology Professional Practice Test
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Booth Rental & Salon Finance Flashcards

7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Booth Rental & Salon Finance flashcards as text

  1. A booth renter donates a free haircut to a local charity auction. Can this be deducted as a charitable business expense?

    Answer: No, because donated services are not deductible; only out-of-pocket supply costs may qualify

    The IRS does not allow deductions for the value of donated time or services; however, tangible out-of-pocket product costs used in the donation may be deductible.

  2. What is the purpose of a 'security deposit' in a booth rental agreement?

    Answer: To protect the owner against unpaid rent or damage caused by the renter

    A security deposit is held by the owner as financial protection against non-payment of rent or physical damage to the booth space.

  3. Which of the following actions could cause a booth renter to be reclassified as an employee by the IRS?

    Answer: Being required to attend mandatory weekly staff meetings called by the owner

    Mandatory attendance at owner-directed meetings indicates behavioral control, a key factor the IRS uses to identify an employment relationship.

  4. A booth renter wants to offer a prepaid service package (e.g., 10 haircuts for $600). When should this revenue be recognized?

    Answer: As each service in the package is performed

    Revenue from prepaid service packages should be recognized incrementally as each service is delivered under the accrual or earned-revenue principle.

  5. A booth renter's home office is used exclusively for booking appointments and managing business finances. What IRS form is used to claim the home office deduction?

    Answer: Form 8829

    Form 8829 (Expenses for Business Use of Your Home) is filed by self-employed individuals to calculate and claim the home office deduction.

  6. What is the key difference between gross profit and net profit for a booth renter's business?

    Answer: Gross profit subtracts cost of goods/services sold; net profit subtracts all remaining operating expenses

    Gross profit deducts direct service costs from revenue, while net profit further subtracts all overhead and operating expenses.

  7. A booth renter is considering switching from cash-basis to accrual-basis accounting. What is the main advantage of accrual accounting?

    Answer: It provides a more accurate picture of financial performance by matching income and expenses to the period they are earned or incurred

    Accrual accounting matches revenue and expenses to the period they occur, giving a truer view of profitability regardless of when cash changes hands.