Exam Questions Flashcards
In keeping with generally accepted practice, and unless otherwise states, rent and other charges to Tenant should begin:
a. the first day of every month.
b. the last day of every month.
c. upon occupancy by Tenant.
d. upon vacancy by the previous tenant.
c. upon occupancy by Tenant.
Greg learns that the _________ accounting cycle, which includes the functions required to lease the office space to tenants for cash, has been poorly administered and recorded.
a. exchange
b. expenditure
c. receipts
d. revenue
d. revenue
Greg wants the owners of Enterprising Properties to enjoy the maximum profit possible from The Diesel Shed One way to make certain that a property, owner receives the value of a dollar of rent adjusted for inflation is to ensure leases have a provision to annually increase base rent based on increases in the:
a. GDP.
b. GNP.
c. CPI.
d. WPI.
c. CPI.
In a __________ market, when rents are __________ than average, tenants often agree to stepped rent increases throughout their lease term.
a. soft; lower
b. soft; higher
c. tight; lower
d. tight; higher
a. soft; lower
As property manager, Bonnie generally delegates the responsibility for preparation of the individual portions of the budget to experts in the field. In other words, she uses __________ budgeting, wherein different parties take responsibility for different sections of the budget for the property.
a. compartmentalized
b. distributed
c. responsibility
d. section
c. responsibility
Bonnie knows that no charges can be assessed against tenants in spaces that are vacant. Also, some tenants have expense caps written into their leases. These facts help explain __________, which is the difference between recoverable operating expenses and the actual operating expenses.
a. lagging
b. regression
c. slippage
d. underwriting
c. slippage
For budgeting other income amounts (such as rooftop; solar panels and storage), Bonnie is best advised to use a(n) __________ schedule for these additional rent charges.
a. monthly tenant-by-tenant
b. annual tenant-by-tenant
c. monthly property-wide
d. annual property-wide
a. monthly tenant-by-tenant
Bonnie has assigned a new hire to code invoices. The first thing the newly hired employee should do to perform this task is:
a. review the budget to determine if the expense items were anticipated.
b check the log to see when the particular invoices were received.
c. sort the invoices into a General Building account.
d. hold the invoices until the first business day of the following month.
a. review the budget to determine if the expense items were anticipated.
What type of invoices should Bonnie expect to find in the organization’s computer holding file?
a. paid
b. unpaid
c. operational
d. capital
b. unpaid
Once coded, invoices are entered into a computer holding file (or pending payables file) for all unpaid invoices. Ref 7-12
As property manager, which type of purchase order copy would be sent to you once it is approved?
a. the control copy,
b. the receiving copy
c. a numerically filed copy
d. an alphabetically filed copy
c. a numerically filed copy
Once a PO is approved and issued to the vendor is is physically tracked until the order is properly completed, accepted, and paid. In a typical flow, 1 copy goes to the vendor, 1 to the building (the receiving copy), 1 to accounting (the control copy), and a numerically field copy is sent to the manager. Note: PO’s should be issued numerically and tracked in a PO log, a numerical listing of all PO’s ordered.
The budget Bonnie draws up is typical in that its time frame corresponds with the reporting frequency required by:
a. GAAP.
b. the owner
c. the state.
d. the federal government.
b. the owner
Typically owners want to see MONTHLY expense budgets because this matches the frequency of all other business activities.
Gayle spends time reviewing the general ledger. If it’s been prepared correctly, she should find cash disbursements transferred to the expense accounts as __________ with total disbursements transferred to the cash account as __________.
a. debits, a debit
b. debits; a credit
c. credits, a debit
d. credits, a credit
b. debits; a credit
Before Gayle’s hire, Granite Properties had somewhat sloppy procedures for dealing with uncollectible rent recording. Now, however, Gayle ensures adherence with proper procedure. This means that during the income accrual process, the revenue should be recorded, then offset by a(n) __________ reflecting the amount of income deemed uncollectible.
a. deferment
b. expense
c. payment
d. accrual
b. expense
One way of making the proposed capital projects more affordable is to take advantage of depreciation. While Canadian depreciation regulations implement the declining balance method, at present, the US is governed by legislation focused on the modified accelerated cost recovery system, which has increased the useful life of commercial, nonresidential, real property to _____ years.
a. 20
b. 25
c. 34
d. 39
d. 39
Note: Created in 1981, ACRS (15-20 years) was replaced by congress in 1987 when they passed MACRS (39 years). AKA Modified Accelerated Cost Recovery System.
Gayle tasks one of her subordinates with using the EER to compare the actual performance of the mall against similar commercial retail buildings in the selected region The true average as presented in the report measures the cost or income per square foot of the property by referring __________ of buildings contributing data.
a. only to the size
b. only to the number
c. to both the number and size
d. neither to the number nor size
d. neither to the number nor size
Gayle wants the midpoint of a set of data she is analyzing. She therefore wants the:
a. mean
b. median
c. mode
d. range
b. median
Mid-Range point eliminates the top and bottom 25% to shows the middle 50% of date.
Gayle relies heavily on the EER, but it does have its limitations. For example, data in the EER may be biased toward __________ properties.
a. older
b. newer
c. larger
d. smaller
a. older
Some prospective tenants are more likely than others to bring in sufficient cash in their business operations. There are a few common ratios Gayle has available to her for determining a company’s earning power. Which of the following is not one of them?
a. return on equity
b. price to earnings
c. earnings per share
d. common size comparative statements
b. price to earnings
There are 3 common ratios to determine earning power:
1) return on equity
2) earnings per share
3) common size comparative statements
What is a Sundry Charge?
Additional bills to tenant based on the authority of the lease contract (i.e. overtime HVAC, additional Trash Pickup, sub-metered utilities, repairs to tenant owned equipment, etc).
Tenant disputes can often be resolved early by:
a. immediate involvement of the landlord’s attorney.
b. reviewing the tenant profile.
c. a quick authoritative response to the inquiry.
d. reading the lease to the tenant.
c. a quick authoritative response to the inquiry.
What type of balance do revenues typically have?
a. debit
b. credit
c. positive
d. negative
b. credit
Which set of ratios measures the ability of a firm to make a profit?
a. earnings power
b. liquidity
c. solvency
d. profitability
a. earnings power
Note: Additional factors considered include Liquidity (ability to meet current obligations) and Solvency (ability to meet long term obligations).
When researching whether costs are being controlled effectively, the first step is to isolate:
a. variable costs.
b. variances caused by uncontrollable factors.
c. variances caused by owner decisions.
d. costs that were not originally budgeted.
b. variances caused by uncontrollable factors.
Note: Ruling out uncontrollable factors gives the owner a truer sense of how the manager is performing.
The cutoff date for receivables data is:
a. always the last calendar day of the month.
b. the end of tenant collection efforts.
c. the last day to record tenant receivable activity.
d. the first day of an audit.
c. the last day to record tenant receivable activity.
Note: The general idea is to of s cutoff date is to provide sufficient time for categorizing, verifying and and transferring data from the cash receipts journal to the general ledger.
The most pervasive method of cost control is:
a. internal controls.
b. purchase order system.
c. budgeting.
d. expense approvals.
a. internal controls.
Also called accounting controls. Examples include, PO’s, supervisor approvals, approved vendor pools, service contracts, etc.
Which is a cost apportionment method?
a. amortization
b. inventory
c. capitalization
d. accrual
a. amortization
If a company’s average annual inventory turnover is six, how many months does it take to completely liquidate its inventory?
a. one month
b. two months
c. four months
d. six months
b. two months
Note: inventory turnover is the amount of times a retailer turns over its average inventory during an accounting period.
Which does a landlord use as a hedge against inflation?
a. investments in bonds
b. additional rent clauses
c. gross lease formats
d. rent abatements
b. additional rent clauses
Before submitting the budget to the owner:
a. have the engineer review all expense items.
b. compare costs per square foot to market averages for reasonableness.
c. budget enough capital expense items to use up any excess cash flows.
d. obtain the services of a CPA for an audit.
a. have the engineer review all expense items.
The process of recording and classifying transactions is know as __________.
Bookkeeping
A system of summarizing, interpreting and communicating financial data is called __________.
Accounting
The functions required to exchange products or services with customers for cash.
Revenue Cycle
Those functions that require property, goods, services, and labor; pay for them; and classify, summarize, and report what is acquired and what is paid for.
Expenditure Cycle
What type of account subset “Utilities” qualify as?
Level 1
Note: Electricity, Gas, Water, etc. would then qualify as a Level 2 subset.
The act of increasing and asset is called?
A debit.
An accounting system in which income and expenses are reported when they are earned or incurred rather than when received or paid.
accrual basis accounting
Uniform set of financial statements (3)
Balance Sheet, Income Statement, Statement of Cash Flows
What’s involved in calculation of property cost increases?
Escalatable Cost Pool, The Base Amount, Tenant’s Pro-Rata Share.
