Chapter 2

Question 1

Why is record keeping important?

Answer 1

It is important because records are required for meeting future refernce needs as well as for ensuring accuracy and for meeting tax and legal requirements.

Question 2

What purpose do records serve?

Answer 2

They allow raw data like rental payments, utility bills, etc to be converted into more permanent forms that can be retrieved and referenced later.

Question 3

Why is attention to accounts payable important?

Answer 3

It is important because prompt payment to vendors, suppliers, etc facilitates good relationships.

Question 4

Why are controls necessary?

Answer 4

They are necessary to esptablish checks and balances for detecting irregularities in bills.

Question 5

What types of controls are commonly used?

Answer 5

Dating/numbering of invoices
Reimbursable expenses backed by receipts
Accounts numbers on invoices
Etc.

Question 6

How is a checks and balances system established?

Answer 6

It is established by having diiferent individuals perform different functions.
Ex) Those who authorize payments are not the same ones who mail checks

Question 7

What is a purchase order?

Answer 7

It is a legally binding document requesting specific goods or services.

Question 8

What does a purchase order contain?

Answer 8

They contain the product or service requested, prices, payment terms, vendor address, PO# etc.

Question 9

What is the typical journey of a purchase order?

Answer 9

1) Quotes received
2) PO issued
3) Vendor receives PO
4) Vendor supplies goods or services
5) Goods or services received
6) Invoice received
7) Invoice checked for accuracy
8) Invoice sent to Accounts Payable for payment

Question 10

What are some advantages of using purchase orders?

Answer 10

They allow for tracking purchases in chronological order, limit access, centralize purchasing, and provide for safeguards against unauthorized use of company funds,

Question 11

What is a contract?

Answer 11

It is a legally enforceable document between two parties.

Question 12

What is a chart of accounts?

Answer 12

It is the list of line items or categories that classifies accounts.

Question 13

What is BOMA International’s Functional Accounting Guide?

Answer 13

It is an account guide specifically tailored to the commercial real estate industry.

Question 14

What are the levels of detail in the BOMA Chart of Accounts?

Answer 14

1) Categories of Building Operations
2) Means and methods by which building functions are achieved
3) subcategories

Question 15

What is a typical tenant file?

Answer 15

A file containing information about each tenant including copies of leases, lease summaries, and escalation clauses.

Question 16

What is rent roll?

Answer 16

It is a quick reference of an entire property that contains information about each tenant.

Question 17

What is a vacancy report?

Answer 17

It is a summary of all of a properties vacancies/

Question 18

What is a delinquency report?

Answer 18

Aa monthly sumary of overdue payments, actions taken to collect, and other information,

Question 19

What is a tickler system?

Answer 19

A method used to remind the user of key dates and deadlines.

Question 20

What is an audit trail?er

Answer 20

A record of every financial transaction associated with a property.

Question 21

Records convert raw data into a:

a) report to be be reviewed by management
b) permanent form for later reference and retrieval
c) statistical chart
d) readable format

Answer 21

b) permanent form for later reference and retrieval

Question 22

(Fill in the blank) Property and facility managers should have a (an)_________ system to remind them of key deadlines and filing dates.

a) management
b) audit trail
c) delinquency
d) tickler

Answer 22

d) tickler

Question 23

All of the following are considered accounts payable except:

a) vendor payments
b) supplier payments
c) rent payments from tenants
d) service provider payments

Answer 23

c) rent payments from tenants

Question 24

What is the emans companies use to organize how the company orders and buys what is needs to do business?

a) purchase orders
b) accounts payable
c) accounts receivable
d) company direction

Answer 24

a) purchase orders

Question 25

BOMA International’s Functional Accounting Guide is specific to the commercial real estate industry in that it segregates expenses according to the:

a) functional cause, such as cleaning or repairs
b) vendor or supplier
c) type of oocupancy, such as retail or parking
d) ownership structure

Answer 25

a) functional cause, such as cleaning or repairs