IREM CPM COMPREHENSIVE EXAM 2025 QUESTIONS AND
ANSWERS RATED A+
✔✔What is an account? - ✔✔It is a detailed statement of receipts and payments of
money that have taken place between two or more parties.
✔✔How are financial transactions categorized in accounting? - ✔✔The major distinction
in accounting is between cash in-flows and cash outflows. Cash coming into a business
is called income, revenue, or receipts. Cash flowing out of a business is called
disbursements, expenses, or expenditures. Accounts receivable are money due to the
business, which make them assets. Accounts payable are debts that the business owes
to its suppliers and vendors, which make them liabilities.
✔✔What is the difference between cash, accrual, and modified accrual accounting? -
✔✔- In cash accounting, revenues are declared in the accounting period in which the
cash is received, and expenses are declared in the accounting period in which cash is
paid out.
- In accrual-basis accounting, revenues are declared in the accounting period in which
they are earned rather than when the cash is received. Expenses are declared in the
accounting period in which the expense is incurred, not when the cash is paid out.
- In modified accrual accounting (also called modified cash accounting), some revenue
categories and expense categories are selected to be declared on a cash basis and
some on an accrual basis. For example, taxes and insurance may be separated out and
treated as accrual expenses rather than cash expenses.
✔✔What is the purpose of a chart of accounts? - ✔✔A chart of accounts is an
organized list of the accounts to which expenses and income will be assigned. The
basic division of the chart of accounts is into income(revenues) and expenses
(disbursements). Categories of accounts are defined by the purposes and plans of the
business, and for that reason, the chart of accounts groups related accounts by
function. Because receipts and disbursements involve many different functions,
separate line items are set up under various classifications.
✔✔How does a purchase order system work? - ✔✔Purchase orders allow the orderly
buying of goods and services for a company's day-to-day business. They are a
centralized set of records that capture data on what was bought and when. Systematic
use of purchase orders organizes and control show a company buys what it needs to do
business because a company cannot buy goods or services informally or on impulse. A
purchase order is a form on which a company's purchasing agent (or other authorized
person) lists in detail what the company wants to buy; it is then sent to the supplier.
Most companies buy only through purchase orders.
✔✔Define operating expenses. What are some examples of operating expenses? -
✔✔Operating expenses are all the costs of operating and maintaining a property. They
include real estate taxes, insurance premiums, utilities, salaries, payroll taxes,
, maintenance costs, repairs, refurbishing of units or other rental space, contracted
services, professional services, and administrative expenses.
✔✔What is the main purpose of a report? - ✔✔The purpose of a report is to portray past
events accurately in an accessible format that communicates information readily to
persons inside and outside the organization.
✔✔How does the income statement differ from a balance sheet? - ✔✔Unlike the income
statement, which divides the world into income and expenses, the balance sheet
focuses on assets and liabilities. Assets are economic resources, such as buildings,
cash, and money owed to the company as accounts receivable. Income is normally a
cash inflow.
✔✔How many times a year, at a minimum, do common interest developments have to
file their taxes? - ✔✔CIDs are required to file taxes every year. Some CIDs may file
more than once a year.
✔✔What does a "disclaimed" opinion mean and why should Boards ensure that this
decision not result from an audit? - ✔✔A disclaimer of no opinion indicates that the audit
was unable to verify the financial statements made by the CID. In other words, the audit
produced inconsistent data with the financial statements, or was unable to determine
how those statements were derived with the available records.
✔✔What is a budget, and what are some notable characteristics of a budget? - ✔✔A
budget is a statement of the financial position of a property or company for a defined
period of time based on estimates of income and expenses. Budgeting is an
information-gathering and monitoring activity that helps managers in meeting their goals
by easing decision-making, allowing daily operations to be managed more closely,
controlling costs and expenditures, and planning for future financial
✔✔What are the basic purposes and uses of an operating budget? - ✔✔The annual
operating budget is a one-year detailed plan for managing a property. An operating
budget can be created for either a fiscal or calendar year. The purpose of the operating
budget is to forecast annual NOI. The operating budget governs how the cash budget is
set up and includes operating expenses and the day-to-day expenses of running a
property. The operating budget lists planned income and expense amounts for each
month and for each account. Besides forecasting the income and expense items
monthly, the operating budget records variances between budget estimates and actual
results.
✔✔What are the two main types of forecasting techniques? - ✔✔Using historical data
on past expenses is a common technique for creating the operating budget and
forecasting future expenses. Information about past expenses is helpful for budget
items that change by predictable amounts from year to year. Working backward through
three years of expense statements will give a good basis for a forecast.
ANSWERS RATED A+
✔✔What is an account? - ✔✔It is a detailed statement of receipts and payments of
money that have taken place between two or more parties.
✔✔How are financial transactions categorized in accounting? - ✔✔The major distinction
in accounting is between cash in-flows and cash outflows. Cash coming into a business
is called income, revenue, or receipts. Cash flowing out of a business is called
disbursements, expenses, or expenditures. Accounts receivable are money due to the
business, which make them assets. Accounts payable are debts that the business owes
to its suppliers and vendors, which make them liabilities.
✔✔What is the difference between cash, accrual, and modified accrual accounting? -
✔✔- In cash accounting, revenues are declared in the accounting period in which the
cash is received, and expenses are declared in the accounting period in which cash is
paid out.
- In accrual-basis accounting, revenues are declared in the accounting period in which
they are earned rather than when the cash is received. Expenses are declared in the
accounting period in which the expense is incurred, not when the cash is paid out.
- In modified accrual accounting (also called modified cash accounting), some revenue
categories and expense categories are selected to be declared on a cash basis and
some on an accrual basis. For example, taxes and insurance may be separated out and
treated as accrual expenses rather than cash expenses.
✔✔What is the purpose of a chart of accounts? - ✔✔A chart of accounts is an
organized list of the accounts to which expenses and income will be assigned. The
basic division of the chart of accounts is into income(revenues) and expenses
(disbursements). Categories of accounts are defined by the purposes and plans of the
business, and for that reason, the chart of accounts groups related accounts by
function. Because receipts and disbursements involve many different functions,
separate line items are set up under various classifications.
✔✔How does a purchase order system work? - ✔✔Purchase orders allow the orderly
buying of goods and services for a company's day-to-day business. They are a
centralized set of records that capture data on what was bought and when. Systematic
use of purchase orders organizes and control show a company buys what it needs to do
business because a company cannot buy goods or services informally or on impulse. A
purchase order is a form on which a company's purchasing agent (or other authorized
person) lists in detail what the company wants to buy; it is then sent to the supplier.
Most companies buy only through purchase orders.
✔✔Define operating expenses. What are some examples of operating expenses? -
✔✔Operating expenses are all the costs of operating and maintaining a property. They
include real estate taxes, insurance premiums, utilities, salaries, payroll taxes,
, maintenance costs, repairs, refurbishing of units or other rental space, contracted
services, professional services, and administrative expenses.
✔✔What is the main purpose of a report? - ✔✔The purpose of a report is to portray past
events accurately in an accessible format that communicates information readily to
persons inside and outside the organization.
✔✔How does the income statement differ from a balance sheet? - ✔✔Unlike the income
statement, which divides the world into income and expenses, the balance sheet
focuses on assets and liabilities. Assets are economic resources, such as buildings,
cash, and money owed to the company as accounts receivable. Income is normally a
cash inflow.
✔✔How many times a year, at a minimum, do common interest developments have to
file their taxes? - ✔✔CIDs are required to file taxes every year. Some CIDs may file
more than once a year.
✔✔What does a "disclaimed" opinion mean and why should Boards ensure that this
decision not result from an audit? - ✔✔A disclaimer of no opinion indicates that the audit
was unable to verify the financial statements made by the CID. In other words, the audit
produced inconsistent data with the financial statements, or was unable to determine
how those statements were derived with the available records.
✔✔What is a budget, and what are some notable characteristics of a budget? - ✔✔A
budget is a statement of the financial position of a property or company for a defined
period of time based on estimates of income and expenses. Budgeting is an
information-gathering and monitoring activity that helps managers in meeting their goals
by easing decision-making, allowing daily operations to be managed more closely,
controlling costs and expenditures, and planning for future financial
✔✔What are the basic purposes and uses of an operating budget? - ✔✔The annual
operating budget is a one-year detailed plan for managing a property. An operating
budget can be created for either a fiscal or calendar year. The purpose of the operating
budget is to forecast annual NOI. The operating budget governs how the cash budget is
set up and includes operating expenses and the day-to-day expenses of running a
property. The operating budget lists planned income and expense amounts for each
month and for each account. Besides forecasting the income and expense items
monthly, the operating budget records variances between budget estimates and actual
results.
✔✔What are the two main types of forecasting techniques? - ✔✔Using historical data
on past expenses is a common technique for creating the operating budget and
forecasting future expenses. Information about past expenses is helpful for budget
items that change by predictable amounts from year to year. Working backward through
three years of expense statements will give a good basis for a forecast.
