Practice Test Geeks(CHP) Certified Hospitality Professional Practice Test
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Financial Management Flashcards

7 cards from real CHP 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 Management flashcards as text

  1. Which statement BEST describes the difference between a cash budget and an income statement?

    Answer: A cash budget tracks actual cash inflows and outflows; an income statement records revenues and expenses on an accrual basis

    A cash budget projects actual cash movements by period, while an income statement reports revenues earned and expenses incurred under accrual accounting regardless of cash timing.

  2. A hotel sells a banquet package for $10,000 and receives a 50% deposit six months before the event. Under accrual accounting, when is the $10,000 revenue recognized?

    Answer: When the event is delivered

    Under accrual accounting, revenue is recognized when the service is performed (the event date), not when cash is received.

  3. What is the primary purpose of a 'rolling forecast' in hospitality financial management?

    Answer: To continuously update projections by adding a future period as the most recent period closes

    A rolling forecast extends the planning horizon by one period as each period ends, providing a constantly updated forward-looking view of financial performance.

  4. Which depreciation method results in the HIGHEST depreciation expense in the early years of an asset's life?

    Answer: Double declining balance method

    The double declining balance method applies twice the straight-line rate to the book value each year, front-loading depreciation expense.

  5. A hotel food and beverage department's beverage cost percentage is 22%. If beverage sales are $30,000, what is the actual beverage cost?

    Answer: $6,600

    $30,000 × 0.22 = $6,600 beverage cost.

  6. A general manager reviews a variance report showing labor costs are $12,000 over budget but rooms sold exceeded budget by 15%. This variance is MOST LIKELY:

    Answer: Favorable because the extra labor supported higher-than-expected demand

    When revenue volume exceeds budget, proportional increases in variable labor are expected and the variance may be favorable in context of higher sales.

  7. Which of the following is a PRIMARY characteristic of fixed costs in a hotel operation?

    Answer: They remain constant regardless of business volume within a relevant range

    Fixed costs such as mortgage payments, insurance, and property taxes remain constant within a relevant range regardless of how many rooms are sold.