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BOMI: BUDGETING AND ACCOUNTING EXAM PREP
LATEST 2025 ACTUAL EXAM TEST BANK| COMPLETE
550 REAL EXAM QUESTIONS AND CORR ECT
DEATILED ANSWERS (VERIFIED ANSWERS )
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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.
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:
- ASC.
- GAAP.
- IFRS.
- SPF. - ANSWER - b. GAAP.
If we grow to the point where we become a large multinational company doing business 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
- ASC
- GAAP
- IFRS 1 / 4
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- 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 determine the success of the property manager in meeting operating plans.
- daily
- weekly
- monthly
- yearly - ANSWER - c. monthly
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."
- income
- cash flow
- accounts payable
- 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.
- accrual
- cash
- modified accrual 2 / 4
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- modified cash - ANSWER - b. cash
What are the categories of Escala table costs? (pages 4-11 to 4-13) - ANSWER - 1. expense vs capital
- operating (recoverable) versus non-operating (non-recoverable)
- indirect versus direct
What are methods for reporting Escala table costs? (page 4-14) - ANSWER - to review the expense amounts to ensure that each category contains a full 12 months of activity.
Explain two different methods for assessing modified gross lease rent increases. (page 4-9) - ANSWER - base year- expenses based on the year, or any other year of occupancy. base amount- base amount is a set dollar amount that is established, also called an expense stop. in this case tenant pays only their portion, called pro rata share
How are CPI increases determined? (page 4-20) - ANSWER - the CPI is determined by comparing the anniversary CPI to the base CPI, and the difference is quantified as a percentage and then applied to each tenants negotiated fraction of that percentage
Describe the benefits of percentage rent. (page 4-21) - ANSWER - if sales of the retail tenant increase above agreed level, the owner then may receive a percentage of those sales. plus, kick clauses attached to a tenant’s percentage rent may allow an owner to terminate a lease if sales levels aren't met 3 / 4
pg. 4 How are cost increases calculated for a property? (page 4-10) - ANSWER - In a modified gross lease, the increase in payment required from each tenant may be calculated using either a base year or a base amount.
When calculating an increase over the expenses in the year of occupancy or any other year, this period is known as the base year. In lieu of using operating costs from a particular year of operation, some - ANSWER - leases provide for a set dollar amount to be established as the base amount. This amount is also called an expense stop. In each case, tenants pay only their portion (called the pro rata share) of the incremental increase over the base amount.
What are the best practices for communicating charges to tenants? - ANSWER - the building professional must provide the tenant as much information with an explanation to ensure they understand. transparency is key in communicating charges to tenants
How is stepped rate used in the commercial real estate industry? - ANSWER - is a lower than average first year rental rate that gradually increases throughout the lease term
What are the three functions of the revenue cycle - ANSWER - 1. billing tenants
- Collecting what's billed
- reporting of billing and collections
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