Practice Test Geeks(CRM) Certified Records Management Practice Test
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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

  1. A property manager is reviewing a lease abstract for a commercial-style ground-floor retail unit in a residential building. Which budget line item would NOT typically appear for a purely residential apartment unit?

    Answer: Common area maintenance (CAM) charges billed to tenants

    CAM charges billed directly to tenants are characteristic of commercial (NNN) leases, not standard residential gross leases where the landlord absorbs operating costs.

  2. A certified residential manager is preparing a year-end financial report. Which statement about a property's cash-on-cash return is CORRECT?

    Answer: It divides annual pre-tax cash flow by total equity invested

    Cash-on-cash return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested, measuring the actual cash yield on the equity deployed.

  3. Which of the following BEST describes the purpose of a rent roll in financial management?

    Answer: A detailed listing of all units, tenants, lease terms, and current rent amounts

    A rent roll is a snapshot document listing every unit, its tenant, lease start/end dates, contracted rent, and any concessions, used to verify income and monitor occupancy.

  4. When evaluating a proposed rent increase, a residential manager should PRIMARILY consider:

    Answer: Market comparable rents, local vacancy rates, and tenant retention risk

    Sound rent increase decisions balance competitive market data, local vacancy conditions, and the cost of tenant turnover (lost rent, make-ready expenses) against the revenue gain.

  5. A property manager is asked to calculate the Gross Rent Multiplier (GRM) for a property priced at $3,600,000 with annual gross rents of $400,000. What is the GRM?

    Answer: 9.0

    GRM = Purchase Price ÷ Annual Gross Rents = $3,600,000 ÷ $400,000 = 9.0.

  6. Which financial management practice BEST protects an owner from unexpected large capital expenditures disrupting cash flow?

    Answer: Funding a replacement reserve account monthly based on a reserve study

    A properly funded replacement reserve, sized by a reserve study, ensures capital is available when major systems fail without destabilizing operations.

  7. A residential property manager is analyzing the impact of a proposed $200,000 renovation that is expected to increase annual NOI by $18,000. What is the payback period?

    Answer: 11 years

    Payback Period = Investment ÷ Annual NOI Increase = $200,000 ÷ $18,000 ≈ 11.1 years.