CAM Financial & Budgeting Responsibilities 2

Question 1

A property manager discovers that actual maintenance costs are running 18% over budget midway through the fiscal year. What is the BEST immediate course of action?

Accepted Answer

Analyze the cause, adjust the forecast, and notify ownership with a remediation plan

Answer

Identifying the root cause and communicating proactively with ownership allows informed decisions and demonstrates financial stewardship.

Question 2

Which financial statement shows a property's assets, liabilities, and owner equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

The balance sheet (statement of financial position) captures the financial snapshot of assets, liabilities, and equity on a given date.

Question 3

When preparing a capital expenditure budget for an apartment community, which item would typically be classified as a capital expense rather than an operating expense?

Accepted Answer

Replacement of all HVAC units

Answer

Replacing HVAC units extends the useful life of the property and is capitalized, whereas routine maintenance is expensed.

Question 4

A property's gross potential rent is $500,000 annually, and the economic vacancy loss is $40,000. What is the effective gross income before adding other income?

Accepted Answer

$460,000

Answer

Effective gross income equals gross potential rent minus vacancy and credit losses: $500,000 − $40,000 = $460,000.

Question 5

Which budgeting method requires every expense to be justified from zero each budget cycle rather than using the prior year as a baseline?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from a 'zero base' and requires justification for all expenses regardless of the previous budget.

(CAM) Certified Apartment Manager Practice Test

(CAM) Certified Apartment Manager Practice Test

CAM Financial & Budgeting Responsibilities 2