Practice Test Geeks(CVPM) Certified Veterinary Practice Manager Practice Test
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Financial Management and Budgeting Flashcards

7 cards from real CVPM 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 and Budgeting flashcards as text

  1. What is the primary purpose of a cash flow forecast in a veterinary practice?

    Answer: To predict when the practice may face cash shortages or surpluses

    A cash flow forecast projects future inflows and outflows to help managers anticipate liquidity needs and plan accordingly.

  2. A veterinary practice charges $250 for a dental cleaning. Variable costs are $75 and fixed costs allocated per procedure are $100. What is the contribution margin?

    Answer: $175

    Contribution margin equals revenue minus variable costs: $250 − $75 = $175 per procedure.

  3. Which financial document summarizes a practice's revenues, expenses, and net income over a specific time period?

    Answer: Income statement

    The income statement (profit and loss statement) reports revenues and expenses over a defined period, resulting in net income or net loss.

  4. When a veterinary practice leases equipment rather than purchasing it, which financial impact is most likely?

    Answer: Improved short-term cash flow preservation

    Leasing avoids the large upfront capital outlay of purchasing, preserving cash flow for operational needs in the short term.

  5. What does the term 'working capital' represent in a veterinary practice's financial management?

    Answer: Current assets minus current liabilities

    Working capital is calculated as current assets minus current liabilities and represents the funds available for day-to-day operations.

  6. A practice manager notices that drug costs as a percentage of revenue have increased from 18% to 24% over six months. Which action should be investigated first?

    Answer: Reviewing inventory control procedures and potential drug diversion

    A significant unexplained increase in drug costs warrants immediate review of inventory controls, ordering practices, and potential theft or diversion.

  7. Which type of budget variance occurs when actual revenue is higher than budgeted revenue?

    Answer: Favorable variance

    A favorable variance occurs when actual results are better than budgeted — higher revenue or lower costs than planned.