CET Budget & Financial Management Flashcards

Which budgeting approach starts from zero and requires justification for every line item regardless of prior year spending?

Answer: Zero-based budgeting

Zero-based budgeting requires every expense to be justified from scratch, eliminating the assumption that prior expenditures are automatically valid.

In event financial management, a 'contingency fund' is BEST defined as:

Answer: A budget reserve allocated for unexpected costs or emergencies

A contingency fund is a pre-planned financial buffer, typically 10–15% of the total budget, reserved for unforeseen expenses.

What does 'return on investment' (ROI) measure in the context of an experiential event?

Answer: The financial and strategic value gained relative to the cost of the event

ROI measures whether the outcomes of the event—revenue, leads, brand value—justify the resources invested in producing it.

Which cost classification describes expenses that remain constant regardless of the number of event attendees?

Answer: Fixed costs

Fixed costs—such as venue rental, staging, and AV—do not change based on attendance numbers.

A 'purchase order' (PO) in event management serves primarily to:

Answer: Authorize and document a transaction with a vendor before payment is made

A purchase order is a formal document issued to a vendor that approves a specific purchase and its terms before the transaction occurs.

When comparing bids from multiple vendors, what is the MOST important factor beyond cost?

Answer: Value delivered relative to price, including quality, reliability, and scope

The best vendor selection balances cost against the total value delivered, including quality, dependability, and comprehensive service scope.