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BOMI: Budgeting & Accounting 2024/2025.
Questions and Correct, Verified Answers.
Abatement - ANSFree rent used as an incentive for prospective tenants. Absolute Net Lease - ANSAll cost of owning, maintaining, and operating the building (including roof replacment and structural items) are paid for by the tenant and are usually paid directly to the providers of the services. Accelerated Cost Recovery Systems (ACRS) - ANSPrescribed by Congress between 1981 and 986 the application of a certain percentage to the cost of an asset resulting in the annual depreciation amount. Account - ANSAn individual record of information and transactions related to each asset of liability and to each aspect of owner's responsibility. Account - ANSHow we classify something Accountants Role - ANSSupport managers by processing, controlling, and reporting accounting data. Deliver accurate, meaningful, and timely financial reports. Accounting - ANSA uniform and consistent system where financial data is: interpreted, summarized, and communicated. Accounting - ANSThe system of summarizing, interpreting, and communicating financial data. Accounting Concepts - ANSThe global assumptions regarding the framework in which the entity operates Accounting Controls - ANS- Collections: Periodic reviews and a tickler system
- Cost Controls: Budget preparations and monthly budget variance reviews
- Other Controls: Management agreement and several layers of review and supervision Accounting Controls - ANSEfforts to safeguard assets, assure accurate and reliable accounting data, promote operational efficiency, adn adhere to prescribed management policies (internal controls) Accounting Cycle - ANSConsists of Similar economic events that are conveted into related types of transactions and processed through the system in similar ways. Accounting Cycles - ANSSimilar economic events converted into related types of transactions and processed through the system in similar ways Accounting Equation - ANSAssets = Liabilities + Owner's Equity Assets - Liabilities = Owner's Equity Accounting Equation - ANSAssets = liabilities + owners equity Accounts Payable - ANS-Debt owed to other businesses
- Recorded as labilities Accounts Receivable - ANS-Money earned but not received
- Recorded as assets Accrual basis accounting - ANSA system that adjusts cash activity for current period activity that did not occur in cash for both revenue and expenditures Accrual Basis Accounting - ANSRecords revenues and expenditures related to the period for which they are applicable, when earned, whether or not cash has been transferred. More sophiciasted. GAAP. Acid-test ratio - ANSratio of quick assets to current liabilities
Bank reconciliation - ANSA comparison of cash receipts and disbursements by reconciling the ending cash balance to the bank records Base income - ANSEarnings received from the monthlu recurring charges as stated in the lease Base index - ANSThe value of a dollar of rent adjusted for inflation using the CPI during the month of the lease commencement Base Rent - ANSThe monthly recurring charges as stated in the lease Base Year - ANSA term used to calculate a bas of operating expenses over which a tenant is expected to pay its proportionate share. Usually, the base year is the calendar year in which the lease is signed. Bookkeeping - ANSProcess of recording and classifying transactions Bookkeeping - ANSThe process of recording and classifying transactions Budget - ANSA plan itemized summary for anticipated expenditures and revenues for a given time period Budget Varriance - ANS-When actual income or expenses vary from the budgeted amount.
- A favorable variance indicates that income exceeds the budget
- A negative variance indicated that expenses exceed the budget Budgeting - ANSThe ongoing process of coordinating resources and expenditures Budgeting - ANSThe process of planning for the coordination of resources and expenditures Budgetng capital - ANSSetting aside reserves for a major expenditures
Cap - ANSA limit on the amount of increase in any one year, usually expressed as a % Capital assets - ANSMajor expenditures, such as a property, plant, or equipment Capital budgeting - ANSThe process of deciding whether or not to commit resources tp a particular project based on the expectation of some future benefit Capital improvement - ANSAn increase in the value of the owners' assets accomplished by either increasing income or reducing expenses Capitalization - ANSTransferring items purchased for use over an extended period of time from the cash basis income or reducing expenses Capitalization Rate (CAP Rate) - ANS-The rate of return from a given property.
- Dividing net operating income by its value or the amount of the initial investment Cash book - ANSA listing of all expenditures and receipts for each business day and the resulting effect on the bank balance Cash controls - ANSProcedures to ensure that cash is properly handled and to combat human error Cash Disbursement - ANSA report listing cash activity paid out on a monthly basis Cash expenditures report - ANSA summary of all cash items disbursed, matched with the corresponding chart of accounts code Cash flow statement - ANSA report that describes the changed in cash from one period to the next Cash Flow Statement - ANSDescribes the changes in cash from one period to the next
Common area maintenance (CAM) charges - ANSExpense incurred to maintain the sidewalks, parking lot, landscaping, and other common areas of the retail center or industrial park common size comparative statements - ANSStatement assigning net sales 100% value and then expressing each income statement item as a % of net sales Comparison yeat - ANSAll years other than the base year of a lease Compounding - ANSCalculation of interest on a principal amount plus interest on the interest accrued during a previous period Consumer price index (CPI) - ANSgovernment statistic to measure inflation Consumer price index (CPI) increase - ANSIncrease due to inflation that is effective on the anniversary date of the lease Contract - ANSLegally enforceable document between two parties Cost accounting - ANSProcess of classifying or segregating the cost of operations into logically similar groups Cost centers - ANSOrganizational units - departments within a company that insure expenses Covenant of quiet enjoyment - ANSTenant at all times during the lease term is granted peaceful and quiet possession of the premises without any encumbrance or hinderance by, from, or through the landlord Current ratio - ANSCompany's current assets : current liabilities Daily journal - ANSbook or lisign of all expenditures and receipts posted on a daily basis
Day's sales uncollected - ANSCalculation of the speed with which a company collects its accounts Debt service - ANSPrincipal and interest paid on a mortgage, bank financing, or other debt. Ground leases payments and amounts received from tenants for deposits are also shown under debt service Debt service ratio - ANS# of times that debt service can be paid from income Deed of trust - ANSAgreement between loan user and holder covering assets Delinquency report - ANSMonthly summary of overdue payments. amounts, actions taken to collect, and other informaiton Depreciation - ANSTransfering the cost of a long-term assets to the cash basis income statement over an estimated useful life Discounting - ANSDividing the future value by the sum and interests compounded each year Double-net (net-net) lease - ANSType of lease which a tenants required to pay separately for insurance and property taxes. Rental payments cover debt service, profit, and repairs Earning power - ANSAbility of a company to generate income Earnings per share - ANSData used to dervaluate hte past performance of a business project its future earnings and weigh investment opportunities Employee Payroll - ANSAccumulating employee data (claimed exemptions, wage rates, benefits) then applying this information to the ongoing hourly information and generating paychecks on a periodic basis depending on pay period frequency Escalatable expense - ANSAny expense defined in the lease that is a part of the expenses subject to recovery by the landlord if the group expenses increase over the amount defined as the base year /base level
Financial statments - ANSA set of reports that consists of an income statement a balance sheet, and a statement of cash flows First-in-first-out (FIFO) method - ANSOldest inventory items are recorded as sold first. Does not mean that the physically oldest items were has been tracked and sold. Cost associated with the inventor that was purchased first is cost expensed first. With FIFO the cost inventory most recently purchased. Fixed cost - ANSOperating expense that can be controlled Fundamental accounting equation - ANS-Basis accounting formula that forms the logical basis for double entry accounting
- The formula is asset = liabilities + owner's equity
- Formula must balance at all times Fundamental Accounting Equation - ANSProvides demonstration of the balance that is required between the assets, liabilities, and owner's equity summary accounts GAAP - ANSGenerally Accepted Accounting Principles. Common set of accounting principles standards, and procedures. Codified by the Financial Accounting Standards Board General journal - ANSSheet or book where all transactions are recorded in chronological order General ledger - ANSCollective record of all the active accounts of the entire business in numerical order Gerneraly Accepted Accounting Principals (GAAP) - ANSConventions and reporting mechanisms that the accounting profession uses to obtain uniform procedures and reports Gross lease - ANS-Tenant only pays base rent
- Without any additional rent
- No operating expenses Ground lease - ANS-Tenant leases a parcel of vacant land
- Pays for all improvement shade on the site Holding file - ANSComputer file for all unpaid invoices Holdover rent - ANS-Rent that is multiple of current rental rate
- If tenant continues to occupy the space after the lease term expires Income statement - ANS-Statement prepared on an accrual basis
- Reporting net income or net loss from revenues earned and expenses incurred Internal rate of return (IRR) - ANS-Measure of investment performance frequently used for acquisition purposes
- Rate of return on capital that is generated or capable of being generated with an investment or portfolio over a period of ownership (similar to equity yield rate) Internal Reporting - ANSNumerous activities must be monitored and reported to properly mange real property such as: tenant collections, vendor payments, and monthly operating results. International Financial Reporting Standartds - ANSEstablished and maintained by the International Accounting Standards Board. Used by many multinational companies in the US and Canada. Inventory - ANS-Asset on balance sheet
- Recording supplies purchased in bulk for for use in future periods Inventory turnover - ANSNumber of times average inventory is sold during accounting period
Leverage ratio - ANS-liabilities for fixed assets are pledged divided by long term assets' book value Levy rates - ANSTaxes set by local government Liability - ANSDebt that is owed Liquidity - ANSAbility of a company to meet its current obligations Loan amortization - ANSRepayment of a loan structured on a monthly basis with part of the monthly payment applied to the interest and part applied to the principal Management agreement - ANSDocument that outlines the scope of work required to manage the property, the compensation, and the reporting requiremetns Matching - ANSRecording expenses incurred in earing revenue regardless of whether cash as been disbursed intheir payment Median - ANSMidpoint of data Mid-range - ANSmiddle 50% of the data Modified Accelerated Cost Recovery System (MACRS) - ANS- CRE starts to depreciate after 39 years
- Increase of useful life of commercial (nonresidential) property to 39 years Modified Accrual Accounting - ANSBoth accrual and cash methods are used. Modified accrual accounting - ANSRevenue and expense categories are declared on a cash basis and some are declared on an accrual basis (hybrid accounting)
Modified Gross Lease - ANS-Tenant to pay for building operating expenses over a preestablished amount term- 150
- Lessor pays for common area maintenance charges up to a fixed amount
- Semi gross lease Mortgage - ANSLien securing a note payable using real assets as collateral Net lease - ANS-Tenant to pay debt service, profit, repairs, and insurance to the lessor
- Tenant pays property taxes separately Net present value (NPV) - ANSDifference between present value of capital outlays and the present value of all future cash flow benefits.
- Positive: NPV reflects return on capital
- Negative: not all capital has been returned
- Expressed as a dollar amount Nonoperating cost - ANSExpense items that are generally unrelated to the management, maintenance, and repair of the building Occupancy audit - ANSAllocating the latest increases in expense items (cleaning cost)to the most recent new tenant based on sq ft occupied Operating Expense - ANS-Cost or expense incurred in operating and maintaining a building. Operating expenses include fixed and variable expenses. Are defined in lease and include cost as utilities, cleaning, security, landscaping, snow removal, general repair, and maintenance etc. Operating expense clause - ANSLease clause that allows operating expenses (typically above a specified threshold) to be passed on to tenants on a prorated or agreed-upon basis Operating expense escalation - ANSReimbursement of increase in the owner's cost of operating the property over the lease base year
Productivity rate - ANS-Comparison of hourly rates, determined by dividing price by hours
- Used before contracting for a service Profit & loss statement (P & L Statement) - ANSIncome statement providing an accurate accumulation of profit or loss via accrual adjustments Purchase order - ANSLegally binding document requesting specific goods or services Real estate investment trust (REIT) - ANSBusiness entity that sells stock and invests proceeds in real estate as its primary business Reminder notice - ANSCourtesy source document for those tenants not using an automated payment software program Rent roll - ANSQuick reference of the entire property that contains information about each tenant Rent roll change instructions - ANSForm that includes basic rent roll categories as well as columns for current and new information Rent steps - ANSScheduled increases in a tenants lease Request for proposal (RFP) - ANSDocument outlining the specific and detailed requirements of the contract. An RFP is used in beginning of contract negotiation Responsibility reporting - ANSPreparation of a portion of the budget along with explanations for any budget variance by the individual who is responsible for the items in that potion of the budget Return on equity (ROE) - ANSRate of return on the common stockholders Return on fixed assets - ANSIncome before debt service divided by average fixed assets
Return on investment (ROI) - ANS-Net profit divided by the total amount originally invested to gain a profit.
- Gauges performance of an investment based on total money invested, including both direct capital contributions and borrowed funds Revenue Cycle - ANSExchange of prpoduce for cash Revenue cycle - ANSFunctions required to exchange products or services with customers for cash Semi-variable cost - ANSOperating expense that displays both fixed and variable components Single-net lease - ANS-Tenant pays for all items included in a double net lease except for taxes
- Lessor is exposed to greater financial risk if operating cost increases during the lease term Slippage - ANSThe difference between recoverable pperating expenses and the actual operating cost Solvency - ANSAbility of a company to meet its long-term obligations Stepped rent - ANSLower than average first year rental rat that gradually increases throughout a leas term Sublease - ANSLessee agrees to lease his or her space to a third party Submeter - ANS-System that allows landlords with buildings that have a single meter to measure and bill tenants for their actual utility in the space they lease.
- Enabling landlords to collect income on specific used, submitting helps them benchmark and evaluate various items including specific equipment, building systems, tenant spaces, and other end uses. Sundry billings - ANSMiscellaneous charges
Vacancy report - ANSSummary of a property's vacancies. Includes the number and types of vacancies all relevant dates and other details about the space. Variable cost - ANSAn operating expense of a company's current
