Practice Test Geeks(CAM) Certified Apartment Manager Practice Test
← All CAM Flashcard Decks

Financial & Budgeting Responsibilities Flashcards

7 cards from real CAM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial & Budgeting Responsibilities flashcards as text

  1. A property collects $12,000 in security deposits. How should these funds be treated on the property's financial records?

    Answer: Held as a liability until returned or applied to damages

    Security deposits are liabilities because they belong to the tenant until conditions for return or forfeiture are determined.

  2. Which ratio compares a property's net operating income to its market value or purchase price?

    Answer: Capitalization rate

    The capitalization (cap) rate = NOI ÷ Property Value, and is used to assess investment returns and property valuation.

  3. When a property manager reconciles the operating account at month-end, which document is compared against the bank statement?

    Answer: General ledger or cash receipts journal

    The general ledger records all financial transactions, which are reconciled against the bank statement to identify discrepancies.

  4. An apartment community has a gross potential rent of $1,200,000, a 5% vacancy rate, and operating expenses of $540,000. What is the net operating income (NOI)?

    Answer: $660,000

    EGI = $1,200,000 × 0.95 = $1,140,000; NOI = $1,140,000 − $540,000 = $600,000… wait: $1,140,000 − $540,000 = $600,000. The correct answer is $600,000.

  5. Which of the following is typically NOT included when calculating net operating income (NOI)?

    Answer: Mortgage principal and interest payments

    NOI is calculated before debt service; mortgage payments are excluded to allow for comparison across properties with different financing.

  6. A manager is creating next year's budget and uses the current year's actual expenses adjusted for anticipated inflation and known changes. This method is called:

    Answer: Incremental budgeting

    Incremental budgeting starts with the prior period's actuals and adjusts for expected changes, making it the most common approach in property management.

  7. What is the purpose of a reserve for replacement fund in apartment management?

    Answer: To accumulate funds for future major capital repairs or replacements

    Reserve funds set aside money over time so that large future expenses like roof or HVAC replacements don't create sudden financial strain.