Financial Management

Question 1

What is a Budget?

Answer 1

A statement of estimated revenues and expenditures for a specified period of time, divided into subject categories and arranged by principal areas of revenue and expense.

Question 2

Three Common Financial goals are?

Answer 2

Profit (net income goal, revenue exceeds expenses), Break-Even goal (revenue equals expenses), and Deficit (Subsidized goal, expenses exceed revenue)

Question 3

What is a cash flow plan?

Answer 3

A spreadsheet to help determine when funds are expected to be received, as well as when expenses need to be paid to determine deadlines for receiving money as well as negotiating terms with suppliers.

Question 4

What is Sponsorship?

Answer 4

A meaningful exchange of value (money, goods or services) for marketing benefits to the sponsor

Question 5

How do you respond to Donation?

Answer 5

Less direct benefits, such as acknowledgement or expectations of public relations benefits to the donor

Question 6

What is a Grant?

Answer 6

Typically money, but can be services, facilities use, or products given by an organization such as a government body, foundation, or corporation for a particular purpose.

Question 7

What is Subvention?

Answer 7

Financial support provided by the host destination or government as an incentive to event organizers.

Question 8

What should a sponsorship prospectus include?

Answer 8

Overview of history of event, return on investment, description of value, letter of proposal, audience demographics, benefits and limitations, terms and conditions, and draft program of event content

Question 9

Types of sponsorship?

Answer 9

Title or Main, Tiered Model, Credit Model, In-Kind, and Partners

Question 10

What is good to know about Exhibitions?

Answer 10

Note that many exhibitions do not produce a profit for their first two to three years because of high start up costs.

Question 11

What should be included in an Exhibitor Prospectus?

Answer 11

Outline all the benefits of the exhibition, and provide information about the show, the attendees, and the policies.

Question 12

What is a hosted buyer program?

Answer 12

A Hosted Buyer program offers complimentary travel, accommodations, and registration for pre-qualified buyers to attend an exhibit.

Question 13

What are Fixed Costs?

Answer 13

Costs that are incurred regardless of the number of attendees (meeting room rental, insurance, signage, audio visual, and overhead)

Question 14

What are Variable Costs?

Answer 14

Costs that vary according to the number of attendees (Food & beverages, and printed material)

Question 15

What are Indirect Costs?

Answer 15

Overhead or Administrative Line Items (staff salary and wages, overhead, equipment repair)

Question 16

What is program-based budgeting?

Answer 16

Allocating a portion of indirect costs to the event budget

Question 17

What is Incremental Budgeting?

Answer 17

Review past history, preferably the last three years, and compares project and actual figures from previous budgets.

Question 18

What is Zero-based Budgeting?

Answer 18

Used when event has never been held before and there is no financial history, so budget is created using estimates of anticipated income and expenses.

Question 19

What is often the first contact your attendees have with your event?

Answer 19

Registration Process

Question 20

What is ASP?

Answer 20

Application Service Providers- online registration companies that offer customization formats, secure credit card transactions process and automatized confirmation.

Question 21

What are Full Service Registration Companies?

Answer 21

Handle Financial transactions as well as attendee communication, on-site staffing, and housing arrangements.

Question 22

What are the two widely used main accounting methods?

Answer 22

Cash Accounting and Incremental or Accrual Accounting

Question 23

What is Cash Accounting?

Answer 23

Counts income and expenses as they are received and paid-does not recognize promises to pay

Question 24

What is Incremental/Accrual Accounting?

Answer 24

Counts expenses when they are earned or incurred-records items as they relate to net worth (assets minus liabilities) regardless of whether cash has exchanged hands.

Question 25

What is an Income Statement?

Answer 25

A statement of revenue and expenses (aka profit and loss reports)

Question 26

What is a Balance Sheet?

Answer 26

Statement that indicates financial status by subtracting expenses from income ~ total amount of assets, liabilities, and networth at a particular time.

Question 27

What is a Cash Flow Statement?

Answer 27

Does not include the amount of future and outgoing cash. Can be determined through 3 methods: core operations, investing, and financing.

Question 28

What is a Chart of Account?

Answer 28

A detailed list of the individual line items that make up the revenue and expense category.

Question 29

What is a Master Account?

Answer 29

An Arrangement for credit between the host organization and the venue to be paid directly by the host organization. Authorization for indicates which charges should be posted on the master account and the limit of financial responsibility.

Question 30

What is a Billing Time Table?

Answer 30

Indicates the budget lifecycle of an event to help monitor cash flow.

Question 31

What is Analysis of variance?

Answer 31

Used to determine the extent that the budgeted revenues, expenses, and profits matched the actual performance

Question 32

What is the Percentage of variance?

Answer 32

Analysis of variance between the actual performance compared to the budgeted performance

Question 33

What are some steps to prevent theft?

Answer 33

Screen candidates, work with trusted staff members, reviewing ethics policies, etc.

Question 34

What are some good Cash Handling Procedures?

Answer 34

Having a safety deposit box or vault; hiring a security officer; If substantial amounts of money. hire security escort for the cash; make deposits on a regular basis; verify deposits by an independent staff member; count and recount cash floats

Question 35

What is an Exchange rate?

Answer 35

The rate at which one country’s currency may be exchanged for another, especially if income is earned in one currency and expenses are spent in another.

Question 36

Why should you be wary about Payments in Foreign currency?

Answer 36

Many international event organizers prefer to deal in the Eur or US dollar, but there may be hidden costs (suppliers marking up their prices for example)

Question 37

What to keep in mind when selecting the currency?

Answer 37

Decide whether organizer or attendee will carry the risk of exchange rate variations.

Question 38

What is Hedging currency risk?

Answer 38

Practice of “buying forward”, a contract to exchange a certain amount of money on a specified date at a specified rate exchange.

Question 39

What to be aware of for taxes?

Answer 39

Review tax consequences in home country for event and attendees, as well as what taxes are in the host country.

Question 40

What is VAT (Value Added Tax)?

Answer 40

VAT is a point-of-sale tax levied by various countries at different rates for different commodities (food and beverage or accommodations), and can vary from 6-21 percent. In general, companies are entitled to reclaim VAT but individuals are not. You will need to display the VAT registration number on all invoices.

Question 41

When choosing an online registration/payment system and website, you should consider?

Answer 41

Does the system use secure digital certificate, payment card industry (PCI) compliance or tokenization; are financial reports comprehensive enough to allow reconciliation reports; can systems be customized to collect specific data for different registrants; can be integrated with secure payment transactions; ability to handle travel or name badge production, speaker management, marketing, and CRM (customer relationship management) functionality or compatibility

Question 42

Break Even Analysis formulas:

Answer 42

Fixed costs/contribution margin= # of attendees to break even OR (Fixed costs/ # of attendees) + variable costs= Registration fee

Question 43

Formula for Contribution margin

Answer 43

Registration fee-variable costs=contribution margin

Question 44

Formula for registration fee that gives a profit

Answer 44

(specified profit + fixed costs)/ # of attendees + variable costs = registration fee

Question 45

Total income formula

Answer 45

fixed income + (# of attendees x registration fee) + ( # of sponsors x sponsor fee) + (# of booths x booth fee)

Question 46

Total expense formula

Answer 46

Fixed costs + (#of attendees X variable costs)= total expense

Question 47

Profit or loss formula

Answer 47

Total income-Total expense= profit or loss