Debt Service - ANSWER Regular payments of the principal and interest on a
loan pg. 153
Market value formula - ANSWER net operating income/cap rate
Which of these situations would increase gross potential rental income? -
ANSWER renting storage space previously not considered rentable
What is a chart of accounts? - ANSWER used to organize financial data that is
collected in the general ledger. real estate managers use this information not
only for purposes of accounting but also for reporting to the owner and others as
well for preparing accurate budgets
Reserve Funds - ANSWER money set aside to pay future expenses. commonly
used to pay for major capital expenditures (e.g. boiler or roof replacement)
reverse engineer a cap rate - ANSWER cap rate= net operating income/sales
price or market value
Taxes on profits are levied against who? - ANSWER income taxes on profits
from real property ownership usually are levied against the individual investor's
personal income
cash- basis accounting - ANSWER the method of accounting that recognizes
income and expenses when money is actually received or paid
Accrual- basis accounting - ANSWER the method of accounting the involves
entering amounts of income when they are earned and amounts of expense
when they are incurred- even though may not be received or paid
When is the best interval to typically pay staff? - ANSWER semi-monthly
payroll system pays employees twice a month- usually on the 15th and last day
of the month
, Operating expense - ANSWER any expenditure made in connection with
operating a property with the exception of debt service, capital reserves, and
income taxes (payroll, office supplies, maintenance, repairs, groundskeeping,
utilities, decorating, and security)
What is the principal record of a property's income? - ANSWER rent roll
rent roll - ANSWER a listing of all rental units, showing the rental rate,
tenant's name, and lease expiration date as well as the status of rent and other
payments
Umbrella liability insurance - ANSWER provides additional liability coverage
beyond the limits of the basic liability policy
Operating budgets - ANSWER lists the principal sources of income and
expenses for the property, usually on a monthly basis
Capital budgets - ANSWER prepared to show how much to set aside in the
reserve fund on a regular basis
Long-range budgets - ANSWER a budget that illustrates the relationship
between operating income and expenses over five or more years in the life of a
property
annual budget - ANSWER most common form of operating budget. 2 kinds
historical and zero-based. projects the whole year's income and expenses for
each account
historical budget - ANSWER reviews income and expenses from previous
years
Zero-based budget - ANSWER consists solely of projections. ignores past
operating expenses
People who perform work at the property may be the employees of who? -
ANSWER all of the above (the property owner, management firm, a
contractor)
loan pg. 153
Market value formula - ANSWER net operating income/cap rate
Which of these situations would increase gross potential rental income? -
ANSWER renting storage space previously not considered rentable
What is a chart of accounts? - ANSWER used to organize financial data that is
collected in the general ledger. real estate managers use this information not
only for purposes of accounting but also for reporting to the owner and others as
well for preparing accurate budgets
Reserve Funds - ANSWER money set aside to pay future expenses. commonly
used to pay for major capital expenditures (e.g. boiler or roof replacement)
reverse engineer a cap rate - ANSWER cap rate= net operating income/sales
price or market value
Taxes on profits are levied against who? - ANSWER income taxes on profits
from real property ownership usually are levied against the individual investor's
personal income
cash- basis accounting - ANSWER the method of accounting that recognizes
income and expenses when money is actually received or paid
Accrual- basis accounting - ANSWER the method of accounting the involves
entering amounts of income when they are earned and amounts of expense
when they are incurred- even though may not be received or paid
When is the best interval to typically pay staff? - ANSWER semi-monthly
payroll system pays employees twice a month- usually on the 15th and last day
of the month
, Operating expense - ANSWER any expenditure made in connection with
operating a property with the exception of debt service, capital reserves, and
income taxes (payroll, office supplies, maintenance, repairs, groundskeeping,
utilities, decorating, and security)
What is the principal record of a property's income? - ANSWER rent roll
rent roll - ANSWER a listing of all rental units, showing the rental rate,
tenant's name, and lease expiration date as well as the status of rent and other
payments
Umbrella liability insurance - ANSWER provides additional liability coverage
beyond the limits of the basic liability policy
Operating budgets - ANSWER lists the principal sources of income and
expenses for the property, usually on a monthly basis
Capital budgets - ANSWER prepared to show how much to set aside in the
reserve fund on a regular basis
Long-range budgets - ANSWER a budget that illustrates the relationship
between operating income and expenses over five or more years in the life of a
property
annual budget - ANSWER most common form of operating budget. 2 kinds
historical and zero-based. projects the whole year's income and expenses for
each account
historical budget - ANSWER reviews income and expenses from previous
years
Zero-based budget - ANSWER consists solely of projections. ignores past
operating expenses
People who perform work at the property may be the employees of who? -
ANSWER all of the above (the property owner, management firm, a
contractor)
