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

Price-volume variance splits a cost change into the portion caused by rate (price) versus usage (volume).

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

Accrual accounting matches income and expenses to the period they relate to, not when cash moves.

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

The expense ratio = total operating expenses / EGI, showing the share of income consumed by expenses.

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

Max debt service = NOI / Required DSCR = $250,000 / 1.25 = $200,000.

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

Both concessions and bad debt reduce the revenue side of the statement, lowering EGI before expenses are subtracted.

(CAM) Certified Apartment Manager Practice Test

(CAM) Certified Apartment Manager Practice Test

CAM Financial Analysis and Reporting 4