©FYNDLAY 2024/2025 ALL RIGHTS RESERVED.
FI 334 Exam 2 Questions And Answers 100%
Verified And Updated.
Debt Service - Answer✔Regular payments of the principal and interest on a loan pg. 153
Market value formula - Answer✔net operating income/cap rate
Which of these situations would increase gross potential rental income? - Answer✔renting
storage space previously not considered rentable
What is a chart of accounts? - Answer✔used to organize financial data that is collected in the
general ledger. real estate managers use this information not only for purposes of accounting, but
also for reporting to the owner and others as well for preparing accurate budgets
Reserve Funds - Answer✔money set aside to pay future expenses. commonly used to pay for
major capital expenditures (e.g. boiler or roof replacement)
reverse engineer a cap rate - Answer✔cap rate= net operating income/sales price or market value
Taxes on profits are levied against who? - Answer✔income taxes on profits from real property
ownership usually are levied against the individual investor's personal income
cash- basis accounting - Answer✔the method of accounting that recognizes income and expenses
when money is actually received or paid
Accrual- basis accounting - Answer✔the method of accounting the involves entering amounts of
income when they are earned and amounts of expense when they are incurred- even though may
not be received or paid
When is the best interval to typically pay staff? - Answer✔semi-monthly payroll system pays
employees twice a month- usually on the 15th and last day of the month
Operating expense - Answer✔any expenditure made in connection with operating a property
with the exception of debt service, capital reserves, and income taxes (payroll, office supplies,
maintenance, repairs, groundskeeping, utilities, decorating, and security)
What is the principal record of a property's income? - Answer✔rent roll
rent roll - Answer✔a listing of all rental units, showing the rental rate, tenant's name, and lease
expiration date as well as the status of rent and other payments
1|Page
, ©FYNDLAY 2024/2025 ALL RIGHTS RESERVED.
Umbrella liability insurance - Answer✔provides additional liability coverage beyond the limits
of the basic liability policy
Operating budgets - Answer✔lists the principal sources of income and expenses for the property,
usually on a monthly basis
Capital budgets - Answer✔prepared to show how much to set aside in the reserve fund on a
regular basis
Long-range budgets - Answer✔a budget that illustrates the relationship between operating
income and expenses over five or more years in the life of a property
annual budget - Answer✔most common form of operating budget. 2 kinds historical and zero-
based. projects the whole year's income and expenses for each account
historical budget - Answer✔reviews income and expenses from previous years
Zero-based budget - Answer✔consists solely of projections. ignores past operating expenses
People who perform work at the property may be the employees of who? - Answer✔all of the
above (the property owner, management firm, a contractor)
What determines the size of the staff of a real estate management firm? - Answer✔1. number of
properties the firm manages
2. types of properties in the portfolio
3. size and tenancy of managed property
4. number of clients the firm has
5. level of service required
6. proximity of the managed properties to each other
7. size of on-site staff
8. size and experience or property manager's support staff
is this cash basis accounting? 2 months rent recorded the first month and then the following. -
Answer✔false
A budget is used to? - Answer✔prioritize spending based on amount of income, expenses, and
cash flow
the level of detail & precision in a long-range budget is the same as in an annual operating
budget T/F - Answer✔False
Which of the following is the best reason for hiring a contractor? - Answer✔all of the above (the
work requires specialized skills, special tools or equipemuns is needed to do the work, people
who do the type of work must be licensed)
Fiduciary bonds should be obtained on all employees who handle money? T/F - Answer✔True
2|Page
FI 334 Exam 2 Questions And Answers 100%
Verified And Updated.
Debt Service - Answer✔Regular payments of the principal and interest on a loan pg. 153
Market value formula - Answer✔net operating income/cap rate
Which of these situations would increase gross potential rental income? - Answer✔renting
storage space previously not considered rentable
What is a chart of accounts? - Answer✔used to organize financial data that is collected in the
general ledger. real estate managers use this information not only for purposes of accounting, but
also for reporting to the owner and others as well for preparing accurate budgets
Reserve Funds - Answer✔money set aside to pay future expenses. commonly used to pay for
major capital expenditures (e.g. boiler or roof replacement)
reverse engineer a cap rate - Answer✔cap rate= net operating income/sales price or market value
Taxes on profits are levied against who? - Answer✔income taxes on profits from real property
ownership usually are levied against the individual investor's personal income
cash- basis accounting - Answer✔the method of accounting that recognizes income and expenses
when money is actually received or paid
Accrual- basis accounting - Answer✔the method of accounting the involves entering amounts of
income when they are earned and amounts of expense when they are incurred- even though may
not be received or paid
When is the best interval to typically pay staff? - Answer✔semi-monthly payroll system pays
employees twice a month- usually on the 15th and last day of the month
Operating expense - Answer✔any expenditure made in connection with operating a property
with the exception of debt service, capital reserves, and income taxes (payroll, office supplies,
maintenance, repairs, groundskeeping, utilities, decorating, and security)
What is the principal record of a property's income? - Answer✔rent roll
rent roll - Answer✔a listing of all rental units, showing the rental rate, tenant's name, and lease
expiration date as well as the status of rent and other payments
1|Page
, ©FYNDLAY 2024/2025 ALL RIGHTS RESERVED.
Umbrella liability insurance - Answer✔provides additional liability coverage beyond the limits
of the basic liability policy
Operating budgets - Answer✔lists the principal sources of income and expenses for the property,
usually on a monthly basis
Capital budgets - Answer✔prepared to show how much to set aside in the reserve fund on a
regular basis
Long-range budgets - Answer✔a budget that illustrates the relationship between operating
income and expenses over five or more years in the life of a property
annual budget - Answer✔most common form of operating budget. 2 kinds historical and zero-
based. projects the whole year's income and expenses for each account
historical budget - Answer✔reviews income and expenses from previous years
Zero-based budget - Answer✔consists solely of projections. ignores past operating expenses
People who perform work at the property may be the employees of who? - Answer✔all of the
above (the property owner, management firm, a contractor)
What determines the size of the staff of a real estate management firm? - Answer✔1. number of
properties the firm manages
2. types of properties in the portfolio
3. size and tenancy of managed property
4. number of clients the firm has
5. level of service required
6. proximity of the managed properties to each other
7. size of on-site staff
8. size and experience or property manager's support staff
is this cash basis accounting? 2 months rent recorded the first month and then the following. -
Answer✔false
A budget is used to? - Answer✔prioritize spending based on amount of income, expenses, and
cash flow
the level of detail & precision in a long-range budget is the same as in an annual operating
budget T/F - Answer✔False
Which of the following is the best reason for hiring a contractor? - Answer✔all of the above (the
work requires specialized skills, special tools or equipemuns is needed to do the work, people
who do the type of work must be licensed)
Fiduciary bonds should be obtained on all employees who handle money? T/F - Answer✔True
2|Page
