Financial Management Flashcards
6 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management flashcards as text
What does 'capitalization rate' (cap rate) represent?
Answer: NOI divided by property value, expressing the unleveraged return
The cap rate equals NOI divided by property value and represents the unleveraged rate of return on a property.
In property budgeting, what is a 'variance'?
Answer: The difference between budgeted and actual figures
A variance is the difference between a budgeted amount and actual performance, used to identify areas needing management attention.
Which budget type projects expected income and expenses for a forthcoming 12-month period?
Answer: Operating budget
An operating budget forecasts revenues and expenses for daily property operations over a 12-month period.
What is a 'reserve fund' in property management?
Answer: Money set aside from operations for future major repairs or replacements
A reserve fund accumulates money over time to cover anticipated major capital expenditures such as roof replacement or parking lot resurfacing.
Which method of accounting records revenue and expenses when cash is actually received or paid?
Answer: Cash-basis accounting
Cash-basis accounting records transactions only when cash changes hands, making it simpler but less reflective of true financial performance.
What does a 'proforma' financial statement represent in real estate?
Answer: Projected future income and expenses used to evaluate investment potential
A proforma is a forward-looking financial projection that estimates expected income, expenses, and returns for a real estate investment.