APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
When converting income into a value indication, with net income we
_______________, and with gross income we ________________________. -
ANSWERS-divide by a rate, multiply by a multiplier
QUESTION 2
"Income derived from the operation of a business or real property; indicates a stage
in the profit-and-loss account where all direct costs and income from the operation
have been taken into account; as distinguished from net profit or cash flow" is also
known as: - ANSWERS-operating income
QUESTION 3
Which of the following is NOT a typical building component that needs replaced at
least once in a building's lifetime? - ANSWERS-foundation
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1
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
QUESTION 4
The standard income capitalization valuation formula is - ANSWERS-V = I ÷ R
QUESTION 5
"The actual or anticipated net income that remains after all operating expenses are
deducted from effective gross income but before mortgage debt service and book
depreciation are deducted" is the definition of ________________ . - ANSWERS-
Net Operating Income
QUESTION 6
An allowance that provides for the periodic replacement of building components
that wear out more rapidly than the building itself and must be replaced during the
buildings economic life is known as: - ANSWERS-replacement allowance
QUESTION 7
Which of the following is a management expense? - ANSWERS-1. setting up
reserves for replacement
2. paying bills
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PAGE
2
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
3. advertising and marketing of vacant spaced
QUESTION 8
Net Operating Income is equal to __________________
minus____________________. - ANSWERS-Effective Gross Income, operating
expenses
QUESTION 9
"The sum of all fixed and variable operating expenses and the replacement
allowance cited in the appraiser's operating expense estimate" is the definition of
______________ expenses. - ANSWERS-total operating
QUESTION 10
When you subtract the allowance for vacancy and credit loss the end result is: -
ANSWERS-effective gross income
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3
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
QUESTION 11
A furnace costs $3,400 to replace, and is expected to last 20 years. What would be
the appropriate charge for reserves for replacement for this item? - ANSWERS-
$170
QUESTION 12
When a 2-unit property is being appraised, when does FHA require the income
approach to be developed? - ANSWERS-When the market contains sufficient data
for the approach to be relevant
QUESTION 13
"The total income attributable to real property at full occupancy before vacancy
and operating expenses are deducted" is the definition of _________________
Income. - ANSWERS-Potential Gross
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PAGE
4
MATTER ELECTIVES EXAM
ANSWER ALL QUESTIONS IN THIS SECTION
QUESTION 1
When converting income into a value indication, with net income we
_______________, and with gross income we ________________________. -
ANSWERS-divide by a rate, multiply by a multiplier
QUESTION 2
"Income derived from the operation of a business or real property; indicates a stage
in the profit-and-loss account where all direct costs and income from the operation
have been taken into account; as distinguished from net profit or cash flow" is also
known as: - ANSWERS-operating income
QUESTION 3
Which of the following is NOT a typical building component that needs replaced at
least once in a building's lifetime? - ANSWERS-foundation
END OF
PAGE
1
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
QUESTION 4
The standard income capitalization valuation formula is - ANSWERS-V = I ÷ R
QUESTION 5
"The actual or anticipated net income that remains after all operating expenses are
deducted from effective gross income but before mortgage debt service and book
depreciation are deducted" is the definition of ________________ . - ANSWERS-
Net Operating Income
QUESTION 6
An allowance that provides for the periodic replacement of building components
that wear out more rapidly than the building itself and must be replaced during the
buildings economic life is known as: - ANSWERS-replacement allowance
QUESTION 7
Which of the following is a management expense? - ANSWERS-1. setting up
reserves for replacement
2. paying bills
END OF
PAGE
2
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
3. advertising and marketing of vacant spaced
QUESTION 8
Net Operating Income is equal to __________________
minus____________________. - ANSWERS-Effective Gross Income, operating
expenses
QUESTION 9
"The sum of all fixed and variable operating expenses and the replacement
allowance cited in the appraiser's operating expense estimate" is the definition of
______________ expenses. - ANSWERS-total operating
QUESTION 10
When you subtract the allowance for vacancy and credit loss the end result is: -
ANSWERS-effective gross income
END OF
PAGE
3
, APPRAISAL SUBJECT 2025
MATTER ELECTIVES EXAM
QUESTION 11
A furnace costs $3,400 to replace, and is expected to last 20 years. What would be
the appropriate charge for reserves for replacement for this item? - ANSWERS-
$170
QUESTION 12
When a 2-unit property is being appraised, when does FHA require the income
approach to be developed? - ANSWERS-When the market contains sufficient data
for the approach to be relevant
QUESTION 13
"The total income attributable to real property at full occupancy before vacancy
and operating expenses are deducted" is the definition of _________________
Income. - ANSWERS-Potential Gross
END OF
PAGE
4
