CRM Financial Management & Budgeting 2

Question 1

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?

Accepted Answer

Analyze line-item expenses to identify the source of the overrun

Answer

Analyzing line-item expenses pinpoints whether the variance is due to an emergency, pricing changes, or ongoing inefficiency before taking corrective action.

Question 2

Which financial statement shows a property's revenues and expenses over a specific accounting period?

Accepted Answer

Income statement (profit & loss)

Answer

The income statement (P&L) summarizes revenues and expenses over a defined period, revealing net operating income or loss.

Question 3

Capital expenditure reserves for a 200-unit apartment complex are best calculated by:

Accepted Answer

Conducting a reserve study that estimates remaining useful life of major components

Answer

A reserve study provides a component-by-component analysis of remaining useful life and replacement cost, producing a scientifically grounded funding schedule.

Question 4

A property's Effective Gross Income (EGI) is calculated as:

Accepted Answer

Potential Gross Income minus vacancy and credit losses plus other income

Answer

EGI = Potential Gross Income − Vacancy & Credit Losses + Miscellaneous Income, representing realistic collectible income.

Question 5

When preparing an operating budget for the coming year, which approach uses prior-year actuals as a baseline and adjusts for known changes?

Accepted Answer

Incremental budgeting

Answer

Incremental budgeting starts with the prior period's figures and adds or subtracts projected changes, making it the most common approach in property management.

(CRM) Certified Records Management Practice Test

(CRM) Certified Records Management Practice Test

CRM Financial Management & Budgeting 2