Money Matters Chapter 13

Question 1

Area Bank Settlement Plan

Answer 1

The system by which Airlines that are members of ARC, Amtrak and certain suppliers receive payments for tickets sold by travel agencies

Question 2

ARC Report

Answer 2

A weekly accounting of a travel agency’s sales of Airline tickets and other accountable documents such as Sales Report or Air Report

Question 3

Most Agencies prefer to accept credit cards from a stranger rather than a check

Answer 3

True

Question 4

You can accept cash from a strangers long as it is not counterfeit

Answer 4

True

Question 5

You can accept traveler’s checks from a stranger as long as they show you a passport or other Identification that matches their name and signature

Answer 5

True

Question 6

You can accept a personal check from a stranger as long as they show you a a picture ID and signs the check in front of you

Answer 6

False

Question 7

Variable

Answer 7

An expense / cost that are proportional to the volume of a business
ex. Commissions - bonuses

Question 8

Income Statement

Answer 8

A financial statement summarizing revenues and expenses for a certain period

Question 9

Invoice

Answer 9

A document that shows the amount a client owes

Question 10

MCO

Miscellaneous Charges Order

Answer 10

An accountable document issued by travel agencies when standard tickets cannot be used

Question 11

Receipt

Answer 11

An invoice that indicates an amount paid and the method of payment used

Question 12

Voucher

Answer 12

A document used to confirm arrangements, identify clients, or indicate payments made issued by a tour operator, cruise line or travel agent

Question 13

Besides wanting to avoid the need to pay immediately or to carry large amounts of cash, what is another major reason clients may wish to pay by credit card in other countries

Answer 13

To obtain a fair rate of exchange

Question 14

Accountable Document

Answer 14

A standard form, numbered by ARC that a travel agency must account for

Question 15

(BSP) (also known as “Bank Settlement Plan)

Answer 15

A billing and settlement plan (BSP) (also known as “Bank Settlement Plan ) is an electronic billing system designed to facilitate the flow of data and funds between travel agencies and airlines.

Question 16

You can accept a credit card from a stranger over the phone as long as you receive an approval code through your computer or via phone

Answer 16

False

Question 17

How Suppliers receive their payments

Answer 17

Suppliers receive their payments directly from clients or their credit card companies, ARC Area Bank Settlement Plan or in the form of a check from travel agencies

Question 18

How do Travel Agencies receive their commissions

Answer 18

3 ways
The sale of accountable documents for services from ARC vendors Airlines, Amtrak
Thru Area Bank Settlement Plan,
when clients pay Pre-deducted by cash or check
When clients pay suppliers directly suppliers send at a later date

Question 19

3 Benefits of Preferred Supplier Relationships

Answer 19

Suppliers have knowledge, work force gets paid when successful
Agencies have in-depth knowledge to clients
Clients provide personal contacts, help solve problems, provide overrides, huge financial impact

Question 20

List 5 sources of income for Travel Agencies

Answer 20

Commissions on airline tickets, car rentals, hotels, cruises, tours, and rail travel.
Other sources are overrides, fees, service charges,markups, and miscellaneous income, sale of travel guides, and other travel related items

Question 21

Base Fare

Answer 21

Airfare before taxes, fees, commissions, or surcharges

Question 22

Cash Flow

Answer 22

The expenses and income that determines the availability of cash

Question 23

Consortium

Answer 23

An association of travel agencies that remain independent but pool their resources for certain purposes such as advertising and training

Question 24

Escrow Account

Answer 24

Funds or property held by a third party such as a bank until specific conditions have been met for its release

Question 25

2 types of financial statements

Answer 25

Income statement- summarizes revenue earned and expenses incurred for a particular period Balance sheet - shows the financial position of a business at a particular time indicating the businesses assets, liability and equity

Question 26

Income Statement

Answer 26

A document that summarizes revenues earned and expenses incurred for a particular period

Question 27

Balance Sheet

Answer 27

A document that shows the financial position of a business at a particular time, indicating the businesses assets, liabilities, and equity

Question 28

3 types of Expenses

Answer 28

Fixed - costs that do not depend on the volume of business Variable - costs that are proportional to the volume of business Semi - Variable - change by less than a proportional amount as the volume of business changes

Question 29

Semi Variable

Answer 29

An expense that changes less than a proportional amount as the volume of business changes Ex. Advertising, Telephone Service

Question 30

Fixed Expense

Answer 30

An expense / cost that do not depend on the volume of business Ex. Rent, salaries, insurance

Question 31

Is a summary of revenue and expenses over 3 months done on the income statement or balance sheet

Answer 31

Income Statement

Question 32

Is the amount of equity or the amount of stock held by the owners of a company listed on the balance sheet as an asset or liability

Answer 32

Liability

Question 33

Is the financial position of a business at a particular time found on Income Statement or Balance Sheet

Answer 33

Balance Sheet

Question 34

A travel agency is owed in hotel commissions and paid a deposit to hold space on a cruise . Is it listed on a balance sheet as assets or liabilities

Answer 34

Assets