BOMI- BUDGETING AND ACCOUNTING
EXAM QUESTIONS AND ANSWERS
100% CORRECT
Which key components make up the bookkeeping process? (2) - ANSWER-recording
and classifying transactions is known as bookkeeping.
Describe the roles filled by a accountant (3) - ANSWER-Accounting is a system of
summarizing, interpreting, and communicating financial data.
What are the primary functions associated with accounting ? (4) - ANSWER-Accounting
is the next step in the process. Accounting is the system of summarizing, interpreting,
and communicating financial data.
Specify functions incorporated in the budgeting process. (4) - ANSWER-Budgeting is
the ongoing process of coordinating resources and expenditures. Through this process,
a plan is created with research and data as the foundation.
The budget reflects the priorities of the business and the resources needed to
accomplish them. - ANSWER-
Describe the accounting cycle types most common to commercial real estate
management business (5) - ANSWER-revenue cycle and the expenditure cycle
What are the three summary account types ? (9) - ANSWER-assets, liabilities, and
owner's equity—with each other as they increase and decrease with debits and credits.
On the balance sheet, assets, liabilities, and owner's equity show the current status of
the finances of the business or the building. - ANSWER-
How are debits and credits applied to fundamental accounting equation ? (11-12) -
ANSWER-liabilities and owner's equity normally have a credit balance
a credit entry will increase the liability or owner's equity and a debit entry will decrease
the liability or owner's equity
assets -normally have a debit balance, a debit entry will increase the value of an asset,
a credit entry will decrease the value of an asset - ANSWER-
explain the relationship between the balance sheets and summary accounts (15) -
ANSWER-The balance sheet is literally a statement of the balances, or amounts, within
all of the assets, liabilities, and owner's equity summary accounts of the business.
,what are the generally accepted accounting principles ? (GAAP) (19) - ANSWER-
Generally accepted accounting principles (GAAP) are a common set of accounting
principles, standards, and procedures that companies use to record accounting data
and compile their financial statements.
GAAP is a combination of authoritative standards (set by policy boards), as well as
commonly accepted ways of recording and reporting accounting information. -
ANSWER-These standards are codified by the Financial Accounting Standards Board
(FASB).
What are international accounting standards ?(19) - ANSWER-Standards established
and maintained by the International Accounting Standards Board, that are used by multi
national companies
What are internal reporting needs common to the real property industry?(20) -
ANSWER-property industry internal reporting includes , tenant collections, vendor
payments, and monthly operating results.
Describe standard financial statements that businesses use? (20) - ANSWER-These
financial statements consist of an income statements, a balance sheet, and a statement
of cash flows.The income statement shows revenues earned and expenses incurred in
earning those revenues, resulting in net income or net loss for the period.
What are common accounting methods used for recording financial transactions ? (21) -
ANSWER-Accounting and financial reports can be prepared on a cash, accrual, or
modified accrual (also known as hybrid) accounting basis.
Day after day, Janet records debits and credits for each entry to the balance sheet. This
pro-
cess is referred to as accounting.
a. single-pass
b. double-pass
c. single-entry
d. double-entry - ANSWER-d. double-entry
The common set of accounting principles, standards, and procedures that Janet uses to
record accounting data and compile the company's financial statements is known as:
a. ASC.
b. GAAP.
c. IFRS.
d. SPF. - ANSWER-b. GAAP.
If we grow to the point where we become a large multinational company doing
busi¬ness in many countries, what set of accounting principles, standards, and
procedures will we use?" asks Janet. "Well then," Harold responds, "in that case, we'll
have to use the
,a. ASC
b. GAAP
c. IFRS
d. SPF - ANSWER-c. IFRS
Over coffee, Harold correctly informs Janet that a .Blank...building-by-building
comparison of actual operating income and expenses against the budget is used to
deter¬mine the success of the property manager in meeting operating plans.
a. daily
b. weekly
c. monthly
d. yearly - ANSWER-c. monthly
When the cash method is used, income and expenses are recorded only when they are
received or paid out. This form of accounting is the most basic and has a cote focus on
the actual timing of both cash received and cash dispersed. - ANSWER-
Explain accounting control strategies as they are used in real estate. (22) - ANSWER-
control strategies place to detect fraud or theft but are primarily put in place to avoid
human error. strategies to avoid missed cash collection, or conversely excessive
outflows that deplete an owners cash. These include, collections, costs controls
Scenario - Chapter 1. Harold, an experienced finances manager for Beach Properties,
hired Janet and is reviewing the various aspects of budgeting and accounting that she
will need to understand and perform. - ANSWER-Although she majored in finance at the
local college, she lacks real world experience. As Harold works with her over the next
few weeks, he will seek to gauge her level of understanding of budgeting and
accounting fundamentals.
He will also have her perform some basic tasks. To the degree that she succeeds, she
will move on to more important and complicated projects. To the degree that she fails,
Harold will provide additional training and support. - ANSWER-
"Janet, your main job function for the next few months will be to record and classify
transactions" says Harold. "In other words, you will be performing the process
of..Blank..
a. accounting b. bookkeeping
c. budgeting d. financing - ANSWER-b. bookkeeping
To the degree you are able to assume the role of accountant, Harold informs Janet,
you'll engage in many more functions. However you will not be responsible
for ....Blank ... Financial data - ANSWER-B. memorizing
If Janet performs an accounting function, she will.. blank...financial data.
a. classify
b. identify
, c. interpret
d. record - ANSWER-c. interpret
remember Janet, that when we create our budget, we make a plan for the financing
expenditures in the ...Blank..., says Harold - ANSWER-d. next year
At lunch, Janet tells a friend that some of the job functions she will be performing
include acquiring property, paying for it, and reporting on what is acquired and paid for.
"Oh," her friend correctly notes, "then you'll be involved in the....BLANK..cycle of
accounting."
a. asset
b. control
c. revenue
d. expenditure - ANSWER-d. expenditure
When Janet "balances the books" (or the summary accounts), she will basically be
dealing with:
a. assets, liabilities, and owner's equity.
b. tax planning, revenues, and liabilities.
c. liabilities, budgets, and owner's equity.
d. owner's equity, capital, and tax planning. - ANSWER-a. assets, liabilities, and owner's
equity
Janet," asks Harold, "if the company takes out a loan to make capital purchases, how
would you record this?" To be correct, Janet should record the money received as
a________in Assets and as a__ in Liabilities.
a. debit; debit
b. debit; credit
c. credit; debit
d. credit; credit - ANSWER-b. debit; credit
Janet, if I want to know what monies have been earned, but not yet received, by the
company, what standard financial statement would I consult?" Janet responds quickly
and
accurately, "You would want to examine the statement."
a. income
b. cash flow
c. accounts payable
d. accounts receivable - ANSWER-d. accounts receivable
For now, Harold has Janet prepare financial reports on a(n) basis, as it is the most basic
method.
a. accrual
b. cash
c. modified accrual
EXAM QUESTIONS AND ANSWERS
100% CORRECT
Which key components make up the bookkeeping process? (2) - ANSWER-recording
and classifying transactions is known as bookkeeping.
Describe the roles filled by a accountant (3) - ANSWER-Accounting is a system of
summarizing, interpreting, and communicating financial data.
What are the primary functions associated with accounting ? (4) - ANSWER-Accounting
is the next step in the process. Accounting is the system of summarizing, interpreting,
and communicating financial data.
Specify functions incorporated in the budgeting process. (4) - ANSWER-Budgeting is
the ongoing process of coordinating resources and expenditures. Through this process,
a plan is created with research and data as the foundation.
The budget reflects the priorities of the business and the resources needed to
accomplish them. - ANSWER-
Describe the accounting cycle types most common to commercial real estate
management business (5) - ANSWER-revenue cycle and the expenditure cycle
What are the three summary account types ? (9) - ANSWER-assets, liabilities, and
owner's equity—with each other as they increase and decrease with debits and credits.
On the balance sheet, assets, liabilities, and owner's equity show the current status of
the finances of the business or the building. - ANSWER-
How are debits and credits applied to fundamental accounting equation ? (11-12) -
ANSWER-liabilities and owner's equity normally have a credit balance
a credit entry will increase the liability or owner's equity and a debit entry will decrease
the liability or owner's equity
assets -normally have a debit balance, a debit entry will increase the value of an asset,
a credit entry will decrease the value of an asset - ANSWER-
explain the relationship between the balance sheets and summary accounts (15) -
ANSWER-The balance sheet is literally a statement of the balances, or amounts, within
all of the assets, liabilities, and owner's equity summary accounts of the business.
,what are the generally accepted accounting principles ? (GAAP) (19) - ANSWER-
Generally accepted accounting principles (GAAP) are a common set of accounting
principles, standards, and procedures that companies use to record accounting data
and compile their financial statements.
GAAP is a combination of authoritative standards (set by policy boards), as well as
commonly accepted ways of recording and reporting accounting information. -
ANSWER-These standards are codified by the Financial Accounting Standards Board
(FASB).
What are international accounting standards ?(19) - ANSWER-Standards established
and maintained by the International Accounting Standards Board, that are used by multi
national companies
What are internal reporting needs common to the real property industry?(20) -
ANSWER-property industry internal reporting includes , tenant collections, vendor
payments, and monthly operating results.
Describe standard financial statements that businesses use? (20) - ANSWER-These
financial statements consist of an income statements, a balance sheet, and a statement
of cash flows.The income statement shows revenues earned and expenses incurred in
earning those revenues, resulting in net income or net loss for the period.
What are common accounting methods used for recording financial transactions ? (21) -
ANSWER-Accounting and financial reports can be prepared on a cash, accrual, or
modified accrual (also known as hybrid) accounting basis.
Day after day, Janet records debits and credits for each entry to the balance sheet. This
pro-
cess is referred to as accounting.
a. single-pass
b. double-pass
c. single-entry
d. double-entry - ANSWER-d. double-entry
The common set of accounting principles, standards, and procedures that Janet uses to
record accounting data and compile the company's financial statements is known as:
a. ASC.
b. GAAP.
c. IFRS.
d. SPF. - ANSWER-b. GAAP.
If we grow to the point where we become a large multinational company doing
busi¬ness in many countries, what set of accounting principles, standards, and
procedures will we use?" asks Janet. "Well then," Harold responds, "in that case, we'll
have to use the
,a. ASC
b. GAAP
c. IFRS
d. SPF - ANSWER-c. IFRS
Over coffee, Harold correctly informs Janet that a .Blank...building-by-building
comparison of actual operating income and expenses against the budget is used to
deter¬mine the success of the property manager in meeting operating plans.
a. daily
b. weekly
c. monthly
d. yearly - ANSWER-c. monthly
When the cash method is used, income and expenses are recorded only when they are
received or paid out. This form of accounting is the most basic and has a cote focus on
the actual timing of both cash received and cash dispersed. - ANSWER-
Explain accounting control strategies as they are used in real estate. (22) - ANSWER-
control strategies place to detect fraud or theft but are primarily put in place to avoid
human error. strategies to avoid missed cash collection, or conversely excessive
outflows that deplete an owners cash. These include, collections, costs controls
Scenario - Chapter 1. Harold, an experienced finances manager for Beach Properties,
hired Janet and is reviewing the various aspects of budgeting and accounting that she
will need to understand and perform. - ANSWER-Although she majored in finance at the
local college, she lacks real world experience. As Harold works with her over the next
few weeks, he will seek to gauge her level of understanding of budgeting and
accounting fundamentals.
He will also have her perform some basic tasks. To the degree that she succeeds, she
will move on to more important and complicated projects. To the degree that she fails,
Harold will provide additional training and support. - ANSWER-
"Janet, your main job function for the next few months will be to record and classify
transactions" says Harold. "In other words, you will be performing the process
of..Blank..
a. accounting b. bookkeeping
c. budgeting d. financing - ANSWER-b. bookkeeping
To the degree you are able to assume the role of accountant, Harold informs Janet,
you'll engage in many more functions. However you will not be responsible
for ....Blank ... Financial data - ANSWER-B. memorizing
If Janet performs an accounting function, she will.. blank...financial data.
a. classify
b. identify
, c. interpret
d. record - ANSWER-c. interpret
remember Janet, that when we create our budget, we make a plan for the financing
expenditures in the ...Blank..., says Harold - ANSWER-d. next year
At lunch, Janet tells a friend that some of the job functions she will be performing
include acquiring property, paying for it, and reporting on what is acquired and paid for.
"Oh," her friend correctly notes, "then you'll be involved in the....BLANK..cycle of
accounting."
a. asset
b. control
c. revenue
d. expenditure - ANSWER-d. expenditure
When Janet "balances the books" (or the summary accounts), she will basically be
dealing with:
a. assets, liabilities, and owner's equity.
b. tax planning, revenues, and liabilities.
c. liabilities, budgets, and owner's equity.
d. owner's equity, capital, and tax planning. - ANSWER-a. assets, liabilities, and owner's
equity
Janet," asks Harold, "if the company takes out a loan to make capital purchases, how
would you record this?" To be correct, Janet should record the money received as
a________in Assets and as a__ in Liabilities.
a. debit; debit
b. debit; credit
c. credit; debit
d. credit; credit - ANSWER-b. debit; credit
Janet, if I want to know what monies have been earned, but not yet received, by the
company, what standard financial statement would I consult?" Janet responds quickly
and
accurately, "You would want to examine the statement."
a. income
b. cash flow
c. accounts payable
d. accounts receivable - ANSWER-d. accounts receivable
For now, Harold has Janet prepare financial reports on a(n) basis, as it is the most basic
method.
a. accrual
b. cash
c. modified accrual
