Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
71 Cards in this Set
- Front
- Back
|
What is the primary consideration when developing an event budget?
cic8, 49 |
Whether the event is intended to make a profit, break even or lose money.
|
|
|
What is incremental budgeting?
cic8, 50 |
building an event budget by analyzing both the projected and actual figures from the previous year's budget.
|
|
|
What is zero-based budgeting?
cic8, 50 |
When budget is based on estimates of income and expenses as their isn't historical data.
|
|
|
What are Indirect Costs?
cic8, 50 |
Listed as overhead or admin line items in a budget.
These are organizational expenses not directly related to the event (staff salaries, equipment repair, etc) |
|
|
What are Fixed Costs?
cic8, 50 |
costs incurred regardless of the number of attendees.
ie. meeting room rental, AV rental, etc. |
|
|
What are Variable Costs?
cic8, 50 |
costs that vary based on the number of attendees (F&B)
|
|
|
What is a break even unit?
cic8, 50 |
The number of attendees needed for the event to break even.
|
|
|
How is the registration fee computed if you know the number of attendees?
cic8, 50 |
Fixed Costs
------------------------------------- = Registration Fee # of attendees + Variable Cost |
|
|
How do you compute the registration fee and you know the # of attendees and the profit you need to make?
cic8, 50 |
Fixed Costs + Profit #
---------------------------------------- = Registration Fee # of attendees + Variable Cost |
|
|
How do you compute a fee if you have a percentage profit needed?
cic8, 50 |
Use the forumla to find the break-even registration fee and then increase the number by the percentage.
ie. if b/e is $500 for registration, and you need to make 10% profit, increase registration by 10%, to $550 |
|
|
What are income items for expense budgets?
cic8, 52 |
Registration Fees
Guest Tour Fees Sporting event fees Tickets to banquets, dinners, etc Exhibit booth sales Sponsorships Grants Advertisement sales Program proceedings (CDs, etc) Interest earned |
|
|
What is Cash Accounting?
cic8, 53 |
Counts income and expenses as they are actually received and paid.
Does not recognize promises to pay or expected revenue. Does not recognize depreciation |
|
|
What is Accrual Accounting?
cic8, 53 |
Counts income and expenses when they are earned or incurred. Accrual-based accounting attempt to match income and expense items together in the income statement.
Records events as they relate to net worth (assests - liabilities) when they occur. More difficult to handle on the books, but a more accurate account of ebb and flow of costs. This is the most common with events and publically traded companies are required to use accrual. |
|
|
What is an income statement?
cic8, 53 |
Statement of revenues and expenses (aka profit and loss statement) which summarizes trasactions accumulated over a period of time (month, quarter, year).
Bottom-line shows the meeting's profit/loss for the time frame covered in the statement. |
|
|
What is a balance sheet?
cic8, 53 |
a statement of overall financial status by subtracting expenses from income.
Provides the bottom line, the total amount of assests, liabilities, and net worth Accruals & pre-payments are recorded here. |
|
|
What is the cash flow statement?
cic8, 53 |
Does not include the future incoming / outgoing cash that has been recorded on credit.
Cash flow looks at core operations, investing, and financing. |
|
|
What should be indicated on the master account authorization form?
cic8, 54 |
Which charges are to be on the master
The limits of financial responsibility the comp. will accept Authorized signers |
|
|
What is a Billing Timetable?
cic8, 54 |
illustrates the budget life cycle of an event from 18 months out to final payment. It helps monitor cash flow.
|
|
|
What is the suggested Billing Timetable?
cic8, 54-55 |
18 mos - Establish expense projections to determine preliminary cash flow
1 yr prior - Send facility billing instructions / requirements 6 mos prior - review billing instructions, master account, etc. w/accounting. Meet the team there. 3 mos - Verify master account, recieve written confirmation - set up a local bank account to deposit checks each day 1 mo prior - Review room rates, F&B, and billing procedures During Event - Conduct periodic review of master account Before Leaving - Review master account billing/charges. Try to settle disputes. Post event - acknowledge completed master account in writing. Only pay for non-disputed items. |
|
|
How does the price increase from year to year for the same program?
pmm5, 30 |
Price increases due to the date, location, and inflation.
|
|
|
How does knowing the demographics of those attending assist with budget?
pmm5, 31 |
The financial status of attendees helps to see what they would be willing to pay to attend.
|
|
|
Why shouldn't it be assumed a 2% increase in attendance will continue the next year?
pmm5, 31 |
The increase could have been due to other factors: good speaker, location, date...
|
|
|
How can you use historical data to predict future costs?
pmm5, 33 |
By comparing the past 2 years' expenses for a line item, you can see the percentage increase and use this as a basis for annual increases in the future.
|
|
|
When researching revenues for a zero-based budget, what is key?
pmm5, 34 |
extensive research must be conducted to determine levels of participation and pricing guidelines that are realistic, market levels, what fees pp are willing to pay, what competitors are charging...
|
|
|
What is a variance analysis report?
pmm5, 42 |
A spreadsheet summary of accounts receivable and payable, showing the meeting's cash flow and an analysis of specific expense items.
|
|
|
When budgeting for international events, what can lower the risk of rising exchange rates?
pmm5, 44 |
"buying forward" at fixed exchange rates can lower the riks of fluctuation in the short term.
|
|
|
What tax issues must be addressed for intern'l meetings?
pmm5, 44 |
1) Whether or not attendees and/or the sponsoring organization will be liable to pay income or other taxes in their home country due to the mtg being held internationally.
(may discourage participation) 2) The liability of attendees to pay local taxes in the coutry where the meeting is held. VAT tax, for example, can be as high as 20%, greatly impacting the budget. |
|
|
What are two types of parternerships Associations and Corporations are increasingly looking at for events?
pmm5, 50 |
Sponsorships
Strategic Partners |
|
|
Before defining sponsorships, we must define advertising and donations. Please do:
pmm5, 50 |
Advertising is any paid form of nonpersonal communication about an orgainzation, product, service or idea by a sponsor
A donation is a cash contribution to an organization or doundation with not expectation of commercial return. |
|
|
What is the fundamental difference between a sponsor and a strategic partner?
pmm5, 50 |
A strategic partner benefits from the relationship on a year-round basis, whereas a sponsor may only be involved for a single item/one time.
|
|
|
What 5 things must a company have an understanding of prior to approaching a potential sponsor or partner?
pmm5, 51 |
1. Assets and asset valuation
2. Packaging 3, Pricing 4. Activiation 5. Fulfillment |
|
|
How does a company review their assests / asset valuation?
pmm5, 51 |
must classify all assets including meetings, print media, logos, digital media, etc.
Must recognize some assets should not be sponsored (as in educational programs - it may dillute the content or reception of the info) Should also speak with potential sponsors to see what they find valuable. |
|
|
How does Packaging play into sponsorship/partnership?
pmm5, 53 |
As sponsors demand greater returns for their money, packaging items can assist to provide this.
Using different levels is popular : gold, silver, etc. Factors to consider: 1) How many partners can the company accept and still deliver value? 2) What assets should be included in an agreement? 3) Length of the agreement 4) Termination Clause |
|
|
When sponsorships are packaged longer-term, what are the benefits/downsides?
pmm5, 53 |
Benefits:
1. Provides the organization a guaranteed source of revenue. 2. Act as a barrier to entry from competitors Downsides: 1. Organization may decide they want to discontinue the assets offered 2. The strategic partner is not the best fit for the organization. 3. If partners are not a good fit, it can do more damage than good. |
|
|
How is Pricing important to sponsorship?
pmm5, 54 |
Pricing is based on the value the package represents to potential sponsors.
Things to consider: 1. What is included in the package? 2. If items were sold separately, what would they cost? 3. What is the competition charging for a similar package? 4. Could the potential sponsor target the same market on their own? 5. How many sponsors are available vs. how many are needed? Sponsors do not have to pay in cash - could be in-kind. |
|
|
How does Activation play into sponsorships?
pmm5, 56 |
Organizations must be proactive with the sponsor to ensure they activate their sponsorship through a pre-plan, concurrent plan, and post-plan.
Pre-plan: creating buzz about eh sponsorship through releases, etc. Concurrent: maximize exposure during the event through press releases, articles, etc. Post Event: Follow up with any prospects and leads. |
|
|
How does Fulfillment play into sponsorship?
pmm5, 57 |
Fulfillment involves ensuring the sponsor is getting what they expect from the relationship and the organization is on top of the timeline/needs/obligations.
|
|
|
What information will the meeting manager keep in the budget handbook?
a: expense line items b: income line items c: calculations for how expenses are determined d: calculations on anticipated income |
All are correct
|
|
|
T or F:
Cash-based accounting refers to the method that records income and expenses at the time the income is received or when the expenses are paid. |
True
|
|
|
T or F:
The balance sheet will show your meeting's accruals and pre-payments. |
True - accruals and pre-payments are recorded on the organziations balance sheet
|
|
|
T or F:
Meeting managers should not alter the original budget for a meeting prior to the event. |
False
|
|
|
T or F:
Part of the pre-con meeting should be devoted to a review of the master account for the meeting. |
False: This should all be done prior to the pre-con.
|
|
|
T or F:
When contracting for the meeting, you may include a requirement that the master account will not be paid until all post-event reports are provided by the facility. |
True
|
|
|
In developing an asset inventory, which of the following items would the organization consider carefully?
a: advertising b: categories of probable assets c: which assets the organization prefers not to have sponsored d: input from the organization's employees on asset potential |
Correct answer: b,c,d
b: categories of probable assets c: which assets the organization prefers not to have sponsored d: input from the organization's employees on asset potential |
|
|
T or F:
"Sponsor" can be defined as a company that pays cash or provides in-kind services/products to an organization for access to the exploitable commercial potential of that organization. |
True
|
|
|
T or F:
Sponsors are generally seeking immediate return in a one-time or short-term arrangement. |
False - most are looking for a long-term relationship
|
|
|
T or F:
Sponsors should consider spending 5:1 to properly activate sponsorships and to realize ROI. |
False: It is more expected to spend up to 2:1
|
|
|
T or F:
To achieve good communication between a sponsor and the organization, a central point of contact for both is necessary. |
True
|
|
|
T or F:
Growth in sponsorships has been slow and a downward trend has been noted in the IEG Sponsorship Report over the past few years (2005, 2004, 2003). |
False
Has increased by over 11.5% from 2004-2005 |
|
|
What is the critical difference between indirect costs and variable costs?
|
c: indirect costs are overhead items, whereas variable costs simply vary with the number of attendees
|
|
|
What is a chart of accounts?
|
A detailed list of the individual line items that make up the revenue and expense categories in a budget. A numbering system used to identify every line item in a budget, so income and expenses are posted to the correct accounts.
|
|
|
What happens on the billing timetable during the event?
|
d: periodic reviews of master account
|
|
|
When estimating a realistic increase over guaranteed pricing for expense line items, what is the most appropriate method?
a. use historical data to predict future costs, based on increase over the past two years (or more) b. find the annual inflation rates for the destination c. find predictable increases based on the Consumer Price Index for the destination d. all of the above e. none of the above |
All are correct methods
|
|
|
What does a break-even budget require?
|
e: income and expense projections that are exactly equal and realistic
|
|
|
When a meeting host anticipates large amounts of income on-site, what are some ways to deal with this?
|
A) set up a bank account at the meeting location for daily deposits
B) Have a bonded staff to deal with it C) See if may apply cash income as credit to the master account at the venue |
|
|
Which of the following is the best approach to asset pricing?
|
a: price should be based on a combination of factors of significance to the sponsor and the organization
|
|
|
Termination clauses are important to both parties involved in a strategic partnership agreement because...
|
a. both parties can stipulate conditions that would provide for a mutually agreeable termination of the partnership
b. it allows one party to terminate when the other party is not meeting their obligation in the partnership c. it allows the opportunity to terminate when an organization wants to discontinue an asset |
|
|
All but one of the following are acceptable bases for exchange rates in worldwide currencies; select the one that is NOT an acceptable currency rate practice.
a. floating against one another in a market relationship b. no fixed basis for currency exchange c. fixed at a certain level d. floating within fixed limits (relatively rare, however) e. fixed for a certain period (relatively rare, however) |
b: no fixed basis for currency exchange
|
|
|
International planners must manage the international event budget to mitigate risks associated with which issue?
|
a: negative exchange rate shifts
|
|
|
How do organizational policies affect the meeting budget?
|
b: they dictate what kind of sponsorships (if any) a meeting planner can garner, based on what kind of consideration the organization will provide for that investment
|
|
|
Which type of meeting is most likely to be set at with a break-even budget?
|
government meetings OR
association meetings with very cost concious attendees. |
|
|
What is the contribution margin?
|
For Breakeven budgeting, The portion of the price (registration fee, for example) used to cover non-variable costs (fixed costs and indirect costs).
IE. Registration is $400 Variable Costs are $300 $100 of each registration goes to the nonvariables. |
|
|
What are non-variable costs?
|
Fixed Costs and Indirect Costs
|
|
|
If the financial objective of a meeting is to gain profit - what are the options of type of profit (2)?
|
1) Specific dollar amount
2) Percentage |
|
|
What is Post-Event Financial Analysis?
|
Financial Management after the event has ended:
1) review actual income and expense vs. the budget 2) analyze any variances to understand why they were different 3) use this analysis to develop new guidelines / budgets / policies for future. |
|
|
What is the definition of a Sponsor?
|
An organization or individual who supports a meeting or event, or a function or service at a meeting or event through cash or in kind products or services for access to exploitable commercial potential
|
|
|
What is the definition of a Strategic Partner?
|
A sponsor with a long-term focus on interaction with aligned goals in a symbiotic relationship
|
|
|
What is "in-kind"? Can sponsorships be this?
|
In-Kind: A non monetary value.
Yes, they can. |
|
|
Whar are some key items in developing the meeting budget?
|
- identify exenses and income
- financial history, factors affecting it - participant demographics - identify line items as a % of budget - Keep a budget handbook |
|
|
What is a spreadsheet control report?
|
a document created upon completion of the budgeting process. Shows anticipated income and expenses by month.
|
|
|
What is the cash flow statement?
|
In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement,[1] is a financial statement that shows how changes in balance sheet and income accounts affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash out of the business.
|
