CAM Financial Analysis and Reporting 4

Question 1

A manager receives a utility bill that is $3,000 higher than the same month last year. Which analysis technique isolates whether the increase is due to rate changes or consumption changes?

Accepted Answer

Price-volume variance analysis

Answer

Trend analysis

Answer

Ratio analysis

Answer

Cash flow forecasting

Question 2

Which of the following best describes 'accrual basis' accounting as it applies to apartment properties?

Accepted Answer

Revenue and expenses are recorded when earned or incurred, regardless of when cash is exchanged

Answer

Revenue is recorded only when rent checks clear the bank

Answer

Expenses are recorded only when invoices are paid

Answer

Income is recognized at year-end in a lump sum

Question 3

A property manager is asked to compute the 'expense ratio.' Which formula is correct?

Accepted Answer

Total operating expenses ÷ Effective gross income

Answer

NOI ÷ Total revenue

Answer

Total debt service ÷ NOI

Answer

Capital expenditures ÷ GPR

Question 4

When a lender requires a DSCR of at least 1.25 and the property's NOI is $250,000, what is the maximum allowable annual debt service?

Accepted Answer

$200,000

Answer

$250,000

Answer

$312,500

Answer

$187,500

Question 5

In an apartment financial statement, 'concessions' and 'bad debt' are typically shown as:

Accepted Answer

Deductions from gross potential rent to arrive at EGI

Answer

Operating expenses below NOI

Answer

Capital expenditures on the balance sheet

Answer

Non-recurring income adjustments

Question 6

A capital expenditure (CapEx) differs from an operating expense primarily because CapEx:

Accepted Answer

Provides benefit over multiple years and is depreciated over its useful life

Answer

Is paid in cash immediately and expensed in the same period

Answer

Is always less than $1,000 per occurrence

Answer

Is included in the calculation of NOI

Question 7

A property shows a favorable budget variance in payroll. This MOST likely means:

Accepted Answer

Actual payroll costs were lower than budgeted

Answer

The property is overstaffed relative to industry norms

Answer

Payroll taxes were not recorded correctly

Answer

Overtime was higher than expected