Financial Planning & Budgeting Flashcards
7 cards from real RCS 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 Planning & Budgeting flashcards as text
A cleaning business owner tracks mileage for tax purposes. Under IRS rules, which method allows deducting a set cents-per-mile rate for business travel?
Answer: Standard mileage rate method
The IRS standard mileage rate method lets business owners deduct a fixed rate per business mile driven instead of tracking actual vehicle expenses.
If a cleaning business raises its prices by 10% and loses 5% of its clients, the net effect on revenue is approximately:
Answer: A 4.5% increase
New revenue = (1.10 × 0.95) = 1.045 of original revenue, representing approximately a 4.5% net increase.
What financial metric measures how efficiently a cleaning business converts revenue into actual cash?
Answer: Operating cash flow
Operating cash flow measures the cash generated from core business operations, showing how efficiently revenue translates into usable cash.
A client cancels a recurring weekly cleaning contract worth $300/month with no notice. To replace this lost revenue quickly, the best short-term financial action is:
Answer: Offer a new-client promotion to attract a replacement recurring client
A targeted promotion to attract a new recurring client is the fastest, lowest-cost way to replace lost steady revenue.
Which accounting method records revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid?
Answer: Accrual basis accounting
Accrual accounting recognizes revenue when services are performed and expenses when incurred, giving a more accurate picture of financial performance.
A cleaning business owner is reviewing whether to buy or lease a new commercial floor scrubber. Which financial factor most favors leasing over buying?
Answer: Preserving cash flow and avoiding a large upfront capital outlay
Leasing requires smaller periodic payments instead of a large upfront purchase, preserving working capital for day-to-day operations.
When a cleaning business receives a large deposit from a client before services are performed, how should this payment be recorded initially?
Answer: As a liability (deferred revenue) until the service is completed
A deposit received before services are rendered is recorded as deferred revenue (a liability) because the business still owes the client the cleaning service.