CAM Financial Analysis and Reporting 3

Question 1

Which of the following is NOT included when calculating Effective Gross Income (EGI)?

Accepted Answer

Mortgage principal payments

Answer

Mortgage payments are a below-the-line financing cost and are never part of EGI calculation.

Question 2

A property's debt service is $200,000 annually and its NOI is $260,000. What is the Debt Service Coverage Ratio (DSCR)?

Accepted Answer

1.30

Answer

DSCR = NOI / Debt Service = $260,000 / $200,000 = 1.30.

Question 3

In apartment accounting, a security deposit held in trust is recorded on the balance sheet as:

Accepted Answer

A liability

Answer

Security deposits belong to residents until forfeited, so they are recorded as a liability (obligation to return).

Question 4

Which budgeting method requires every expense to be justified from zero each budget cycle rather than basing it on the prior year?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from a 'zero base' each cycle, requiring justification for every line item.

Question 5

An apartment property has 100 units at $1,000/month market rent and runs 5% vacancy. What is the annual EGI before other income?

Accepted Answer

$1,140,000

Answer

GPR = 100 × $1,000 × 12 = $1,200,000; minus 5% vacancy ($60,000) = $1,140,000 EGI.

(CAM) Certified Apartment Manager Practice Test