CFP Business Management & Operations Flashcards
6 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CFP Business Management & Operations flashcards as text
Which type of bond guarantees that a fence contractor will complete a project according to the contract terms?
Answer: Performance bond
A performance bond guarantees the project owner that the contractor will fulfill all contractual obligations and complete the work as agreed.
To legally employ workers in the United States, a fence contractor must obtain which federal identification number?
Answer: Employer Identification Number (EIN)
An Employer Identification Number (EIN) issued by the IRS is required for all businesses with employees to handle payroll taxes and reporting.
A fence company's overhead costs include which of the following?
Answer: Office rent and vehicle insurance
Overhead costs are ongoing business expenses not tied to a specific job, such as office rent, utilities, vehicle insurance, and administrative salaries.
Which practice best protects a fence contractor when hiring subcontractors?
Answer: Verifying the subcontractor's insurance and license before work begins
Verifying a subcontractor's insurance certificate and license protects the general contractor from liability for the subcontractor's actions or injuries.
What financial metric is calculated by dividing net profit by total revenue and multiplying by 100?
Answer: Net profit margin
Net profit margin expresses the percentage of revenue that remains as profit after all expenses, helping contractors assess overall business profitability.
When preparing a competitive bid, a fence contractor should include all of the following EXCEPT:
Answer: Competitor's profit margins
A bid is based on your own costs, labor, overhead, and desired profit margin — not on what competitors choose to charge.