Domain III: Management of Food and Nutrition Programs and Services: Financial Management

Question 1

The purpose of the budgeting process and fiscal periods is to give managers a basis for _____ in the estimate of future needs

Answer 1

Control

Question 2

The budget must be ____ and adjustable according to change; usually reviewed monthly

Answer 2

Flexible

Question 3

An _____ budget is a forecast of revenues, expenses, and profit for a specific period of time

Answer 3

Operating

Question 4

The first step of developing an operating budget is to create a forecast of ____ or ____ portion

Answer 4

Sales or revenue

Question 5

The second step of developing an operating budget is to budget ____ (labor, food, operating expenses) related to the projected level of revenue

Answer 5

Expenditures

Question 6

A ____ budget projects revenue and expenses, showing inflow and output of cash

Answer 6

Cash

Question 7

The purpose of a cash budget is to determine if ____ will be available when needed

Answer 7

Funds

Question 8

A _____ budget is used in plant facilities, for equipment, cost of improvements and repairs, expansions, replacements, etc

Answer 8

Capital

Question 9

The capital budget includes expenditures whose returns are expected to last beyond ___ year

Answer 9

One

Question 10

A ___ ___ statement (hypothetical) projects expected income, expenditures, and profit

Answer 10

Pro forma

Question 11

A ____ (incremental, baseline) method to establish line items in a budget uses the existing budget as a base and projects changes for the ensuing year in relation to the current budget

Answer 11

Traditional

Question 12

A traditional budget usually begins with this year’s expenses plus an ____ factor

Answer 12

Inflation

Question 13

A traditional budget is ___-oriented

Answer 13

Control

Question 14

A traditional budget is prepared at one level of ____ or ____

Answer 14

Sales or revenue

Question 15

A ____ ____ budget begins at 0 and must justify each expense (more planning required)

Answer 15

Zero-based

Question 16

One example of a zero-based budget is a ___, ___ budgeting system

Answer 16

Planning, programming

Question 17

With a Planning, Programming Budgeting System, past dollar ____ are NOT the basis of projections

Answer 17

Allocations

Question 18

A zero-based budget is ____-oriented

Answer 18

Planning

Question 19

A ____ budget is prepared at one level of sales or revenue (no expected major change in patient or customer count during the year)

Answer 19

Fixed

Question 20

A ____ budget is adjusted to various levels of operation with varying levels of sales or revenue throughout the year (changes in patient or customer count)

Answer 20

Flexible

Question 21

A flexible budget might account for something like…

Answer 21

-Closing a floor for renovation

Question 22

A flexible budget gives a dollar range for ____ to ____ levels of predicted activity

Answer 22

Low to high

Question 23

A _____ budget details what it costs to perform an activity (how much to supervise the trayline)

Answer 23

Performance

Question 24

____ (fixed) costs are not affected by sales volume (number of people served) and is not directly evident in day-to-day activities

Answer 24

Indirect

Question 25

Indirect costs are required for a business to exist even if it produces ____; cannot be readily changed

Answer 25

Nothing

Question 26

Examples of indirect costs:

Answer 26

-Rent -Taxes -Interest on debt -Insurance -Depreciation

Question 27

Indirect costs stay ____ within a range of sales volume

Answer 27

Fixed

Question 28

_____ is the cost associated with the acquisition and installation of a fixed asset and how they are allocated over the estimated useful life of the asset

Answer 28

Depreciation

Question 29

____ ____ depreciation gives annual depreciation

Answer 29

Straight line

Question 30

Formula to calculate straight-line depreciation:

Answer 30

(Value of the equipment (cost) - salvage value) / (# of years of useful life)

Question 31

______ depreciation is the total depreciation up to a given date, subtracted from the original cost of the item

Answer 31

Accumulated

Question 32

Accumulated depreciation is included in the ____ assets

Answer 32

Fixed

Question 33

Direct, variable, and flexible costs vary directly with changes in ____ (revenue); directly involved in service to the customer

Answer 33

Sales

Question 34

Examples of direct, variable, and flexible costs:

Answer 34

-China -Silver -Food -Uniforms -Laundry -Repairs -Benefits

Question 35

___-__ costs have both a fixed and a variable component

Answer 35

Semi-variable

Question 36

With sem-variable costs, a portion of the cost will remain fixed regardless of changes in ___ ___

Answer 36

Sales volume

Question 37

Examples of semi-variable costs:

Answer 37

-Labor -Maintenance -Utilities

Question 38

Semi-variable costs are divided into fixed and variable components before doing ___-___ analysis

Answer 38

Break-even

Question 39

_____ costs are already incurred and cannot be recouped by a new decision or alternative

Answer 39

Sunk

Question 40

An example of a sunk cost is:

Answer 40

The cost involved in studying the merits of a new computer

Question 41

_____ costs are the amount of increase or decrease in cost when you compare alternative choices

Answer 41

Differential

Question 42

An example of a differential cost is...

Answer 42

The difference in cost between two meal delivery systems

Question 43

____ ____ is the efficient allocation of people, materials, and equipment to meet the needs of the operating system (can lead to cost savings)

Answer 43

Resource allocation

Question 44

The ___ ___ ____ helps plan and control an operation; it identifies the most critical activities in order to best allocate limited resources

Answer 44

Critical Path Method

Question 45

Food costs are the most readily controlled item, and are subject to the greatest ____ in cost

Answer 45

Fluctuation

Question 46

____ planning is the most important part of controlling food costs

Answer 46

Menu

Question 47

The type of service also impact food costs; a ____ menu reduces waste and costs

Answer 47

Selective

Question 48

____ buying of food reduces food costs

Answer 48

Group

Question 49

To reduce food costs, there must be receiving control; weight-in and check items against the ____

Answer 49

Invoice

Question 50

____ and ____ of food should also be tightly controlled in order to reduce food costs

Answer 50

Storage and production

Question 51

____ portions can be used to control costs and for customer satisfaction; keep records of employee meals

Answer 51

Standard

Question 52

Labor costs are less ____ than food costs

Answer 52

Controllable

Question 53

Operating costs usually make up ___-___% of the budget; they include things like utilities, laundry, etc

Answer 53

12-18

Question 54

____ ____ accounting recognizes a transaction at the time the cash is taken in or released

Answer 54

Cash basis

Question 55

____ ____ accounting recognizes revenues when earned and expenses when incurred (regardless of when the actual cash is received or dispersed)

Answer 55

Accrual basis

Question 56

A ____ ____ records and reports transactions categorized by account numbers; includes a summary of all expenses and revenues for the month by category (meat, fruit, dairy)

Answer 56

General ledger

Question 57

An income statement, profit and loss statement, and revenue and expense statement show ____ results over a period of time (dynamic)

Answer 57

Operating

Question 58

Income statements, profit and loss statements, and revenue and expense statements present the income (revenue), expenses, and profit over the course of the ____ ____

Answer 58

Budget period

Question 59

Income statements, profit and loss statements, and revenue and expense statements analyze operational _____

Answer 59

Effectiveness

Question 60

A ____ ____ shows the financial condition as of a particular date (static); it lists assets and liabilities

Answer 60

Balance sheet

Question 61

Examples of assets:

Answer 61

-Cash -Inventory -Accounts receivable

Question 62

Accounts receivable is money ____ to you

Answer 62

Owed

Question 63

Liabilities are moneys you ___ to someone

Answer 63

Owe

Question 64

Assets are equal to ____ + ____

Answer 64

Liabilities plus capital (equity, owner's interest)

Question 65

A balance sheet analyzes operational ____; it is a quick way to view financial condition

Answer 65

Effectiveness

Question 66

Financial ____ use formulas to analyze an organization's financial position

Answer 66

Ratios

Question 67

Formulas use data from ____ ____

Answer 67

Financial statements

Question 68

Financial formulas compare the ____ with similar ones

Answer 68

Organization

Question 69

Financial formulas also compare ratios with those ____ or with ____ ratios

Answer 69

Projected; preceding

Question 70

_____ ratios assess the ability to meet short-term debt (pay bills when due)

Answer 70

Liquidity

Question 71

Liquidity ratios assess current ____ with current ____ (current: within 12 months)

Answer 71

Assets; liabilities

Question 72

____ ____ ratios assess the ability to meet long-term debt (solvency)

Answer 72

Net worth

Question 73

Next worth ratios assess ____ assets and ____ liabilities (debt to asset ratio)

Answer 73

Total; total

Question 74

_____ ratios (asset management) show current effectiveness of *inventory control* (answers the question of whether you are efficiently using the assets to produce more income?)

Answer 74

Turnover

Question 75

The inventory turnover rate is equal to the...

Answer 75

Cost of sales (food cost) / average inventory cost

Question 76

Cost of goods sold is a measure of how often inventory is ____ and ____

Answer 76

Consumed and replenished

Question 77

A turnover rate of ____-____ times per month is often desireable

Answer 77

2-4

Question 78

A high turnover rate indicates a ____ inventory is being kept

Answer 78

Limited

Question 79

A low turnover rate indicates that large amounts of money are tied up in ____

Answer 79

Stock

Question 80

The daily food cost report (food cost percentage) indicates what percentage of the income was spent on ____ sold

Answer 80

Food

Question 81

The food cost percentage is equal to...

Answer 81

Daily food cost / daily income

Question 82

The food cost per meal is equal to...

Answer 82

Food cost per month / # meals per month

Question 83

Food cost is equal to food ____ plus foods removed from ____

Answer 83

Purchased; inventory

Question 84

To determine food cost, you need to know...

Answer 84

-# meals served -Food purchases -Foods removed from inventory

Question 85

The ____ ____ is the most commonly used assessment of overall financial efficiency

Answer 85

Profit margin

Question 86

The profit margin reflects the portion of ____ ____ remaining after paying all expenses

Answer 86

Sales volume

Question 87

Formula for determining the profit margin:

Answer 87

Net profit (profit after all expenses have been paid) / sales dollars (revenue)

Question 88

____ includes income from patients, cafeteria sales, and catering sales

Answer 88

Revenue

Question 89

The cost of ____ is the cost of raw food and beverages sold

Answer 89

Sales

Question 90

The ____ profit is the profit shown after deducting raw food and beverage costs (cost of sales) from sales (revenue)

Answer 90

Gross

Question 91

The ____ profit is the profit shown after ALL expenses have been deducted from sales

Answer 91

Net

Question 92

A ____ ____ determines the length of time it will take for the cash inflows from a project to equal the initial cash outlay (how much time it will take for an investment to pay back the organization for the investment)

Answer 92

Payback period

Question 93

To determine the payback period...

Answer 93

-Add up the costs of the service -Add up the costs saved by using the new service -Divide the costs of the service by dollars saved