CPCE Financial Management & Budgeting Flashcards
6 cards from real CPCE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPCE Financial Management & Budgeting flashcards as text
What is the 'cost of goods sold' (COGS) for a catering event?
Answer: The direct cost of food, beverage, and disposable supplies consumed at that event
COGS in catering represents the direct, variable costs of ingredients, beverages, and single-use supplies that are consumed to produce and serve the event's menu.
What is the primary financial risk of 'overbooking' multiple large events on the same date?
Answer: Inability to fulfill contracts, leading to penalties and reputational damage
Overbooking beyond operational capacity risks failing to fulfill contractual obligations, exposing the caterer to breach of contract penalties and long-term reputational harm.
What does 'accounts receivable' represent in a catering business?
Answer: Money owed to the caterer by clients for services already delivered
Accounts receivable is money clients owe the caterer for completed events that have been invoiced but not yet paid, representing a current asset on the balance sheet.
Why is 'cash flow management' especially critical in catering compared to many other businesses?
Answer: Because large expenses for staffing and supplies precede event revenue, creating timing gaps
Caterers typically pay for food, labor, and rentals before or during the event, while final client payment may come days or weeks later, creating cash flow gaps that must be managed carefully.
What is the purpose of conducting a post-event 'profit and loss review' for each catered event?
Answer: To compare actual costs and revenue against estimates to improve future pricing and planning
Post-event P&L reviews identify variances between projected and actual food costs, labor, and revenue, enabling caterers to refine their pricing models and operational efficiency.
In US catering, what does 'attrition clause' in a contract protect against?
Answer: Revenue loss when actual guest attendance falls significantly below the contracted minimum
An attrition clause specifies the percentage by which actual attendance can fall below the guaranteed count before the client owes additional fees to compensate the caterer for unrecovered costs.