Financial Management & Budgeting Flashcards
7 cards from real CRM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management & Budgeting flashcards as text
A residential property manager notices that actual maintenance costs exceeded the budgeted amount by 18% in Q2. What is the BEST first step to address this variance?
Answer: Analyze line-item expenses to identify the source of the overrun
Analyzing line-item expenses pinpoints whether the variance is due to an emergency, pricing changes, or ongoing inefficiency before taking corrective action.
Which financial statement shows a property's revenues and expenses over a specific accounting period?
Answer: Income statement (profit & loss)
The income statement (P&L) summarizes revenues and expenses over a defined period, revealing net operating income or loss.
Capital expenditure reserves for a 200-unit apartment complex are best calculated by:
Answer: Conducting a reserve study that estimates remaining useful life of major components
A reserve study provides a component-by-component analysis of remaining useful life and replacement cost, producing a scientifically grounded funding schedule.
A property's Effective Gross Income (EGI) is calculated as:
Answer: Potential Gross Income minus vacancy and credit losses plus other income
EGI = Potential Gross Income − Vacancy & Credit Losses + Miscellaneous Income, representing realistic collectible income.
When preparing an operating budget for the coming year, which approach uses prior-year actuals as a baseline and adjusts for known changes?
Answer: Incremental budgeting
Incremental budgeting starts with the prior period's figures and adds or subtracts projected changes, making it the most common approach in property management.
A residential manager is comparing two vendors for landscaping. Vendor A charges $1,200/month; Vendor B charges $950/month but requires a $3,000 setup fee. At what month does Vendor B become less expensive on a cumulative basis?
Answer: Month 12
The $3,000 setup fee is recovered at $250/month savings after approximately 12 months, making Vendor B break even at month 12.
Which ratio measures how efficiently a property converts income into profit BEFORE debt service?
Answer: Net Operating Income margin
The NOI margin (NOI ÷ EGI) reflects how much of collected income remains after operating expenses, before financing costs.