Exam (elaborations)
BOMI Chapter 1-14 Key Concept Study Guide: Budgeting & Accounting Cumulative (Q’s & A’s)
- Course
- Institution
BOMI Chapter 1-14 Key Concept Study Guide: Budgeting & Accounting Cumulative (Q’s & A’s)
[Show more]
Content preview
BOMI Chapter 1-14 Key Concept Study Guide:Budgeting & Accounting Cumulative (Q’s & A’s)
1-1. Which key components make up the bookkeeping process? (1-2&4)
Right Ans - Is the process of recording and classifying transactions
(a financial event that is shown within a financial statement/report)
1-1a. What is budgeting (1-2)? Right Ans - It is an ongoing process
coordinating resources and expenditures. It is comprised of:
· Analysis of the past
· Benchmarking (reviewing performance metrics)
· Future Projections
1-1b. What does a budget reflect (1-2)? Right Ans - A business' priorities
and the resources needed to accomplish those priorities.
1-1c. How do property and facility managers use periodic financial reports (1-
3)? Right Ans - They use them to make budgets and make business
decisions to best balance the needs of the occupants at the property and
market forces with the goal of enhancing the property value.
1-2. Describe the role(s) filled by an accountant during the holding period. (1-
3) Right Ans - · Support managers by processing, controlling and reporting
accounting data.
· Deliver accurate, meaningful and timely financial reports
(They support the PM, they do NOT to explain a variance.)
1-1d. What are transactions (1-3)? Right Ans - A financial event that is
recognized in a financial statement or report.
They must be sorted into orderly, systematic, and logical classifications to
properly convey financial information.
1-2a. Describe the role(s) filled by a property manager during the holding
period. (1-3) Right Ans - · Meeting the owner's goals and objectives, which
usually include protecting and growing the cash flow.
· Properly caring for the physical asset.
,Both roles result in enhancing the value of the property, thus proving profit
potential upon sale.
1-3. What are the primary functions associated with accounting? (1-4)
Right Ans - It is a uniform and consistent system where financial data is:
· Interpreted
· Summarized
· Communicated
1-4. Specify functions incorporated in the budgeting process. (1-4) Right
Ans - The process of planning and coordinating resources (cash/deposits) and
expenditures (money spent)
1-5. Describe the accounting cycle types most common to the commercial real
estate management business. (1-5) Right Ans - · Capital (property
acquisition & financing)
· Conversion (non-monetary assets)
· Expenditure (Exchange for goods or services Ex. Utility services)
· Revenue (Exchange for cash Ex. Commercial Office Space)
1-5a. Define Revenue Cycle? (1-5) Right Ans - It includes the functions
required to exchange products or services with customers for cash.
1. Signing: A tenant signs a lease for office space.
2. Administering: Lease administered, includes assessing charges for use of
space
3. Collecting: Rent & Services Revenue is collected.
4. Recording: Collected Revenue is recorded.
5. Reconciling: Summary of accounts confirmed and reconciled to make sure
they balance.
1-5b. Define Expenditure Cycle (1-6) Right Ans - Includes the functions
that:
· Acquire property, goods, services, and labor
· Pay for them
· Classify, summarize, and report----what is acquired and what is paid for?
Ex. Labor-internal & external, Supplies, Utility Services etc.
1-5b1. Explain the 4 Steps in the Expenditure Cycle for the Acquisition of
Goods and Services. (1-7) Right Ans - Goods and Services are:
,1. Requested from vendor via PO or monthly contract.
2. Received and documented by receiving document or service record.
3. Vendor invoice is coded, approved, & processed for payment.
4. Check issued to vendor to pay invoice.
1-5c. What is an account (1-6)? Right Ans - An individual record of
information and transactions related to each asset or liability and each aspect
of owner's equity.
1-6. What are the three summary account types? (1-9) Right Ans - · Assets
(everything a company owns)
Ex. Cash, building & land, inventory supplies, office furniture
· Liabilities (funds borrowed—like mortgage)
Ex. Accounts payable, debts owed for equip & furniture, mortgages
· Owner's Equities (owner's money)
Everything remaining after liability is subtracted by the sum of all assets.
1-6a. What is the basic accounting equation? (1-9) Right Ans - Owner's
Equities= Assets - Liabilities
OR
Assets= Liabilities + Owner's Equity
OR
Assets= Liabilities + (Capital + Revenue-Expenses)
1-6b. What is true about both sides of the accounting equation? (1-9) Right
Ans - They are equal. Always.
1-7. How are debits and credits applied to the fundamental accounting
equation? (1-11-12) Right Ans - They are the backbone of accounting and
are considered double entry accounting.
1-7. How are debits and credits applied to the fundamental accounting
equation? (1-11-12) [In Terms of Owner's Equity] Right Ans - Cheat Sheet:
Increase revenue (asset)---credit
Increase expense (liability)---debit
For Assets & Owner: Opposite of what you'd think ***
For Liability:
Increase a liability (credit it) ***
, Decrease a liability (debit it)
Remember: Double Entry Accounting
1-8. Explain the relationship between the balance sheet and summary
accounts. (1-15) Right Ans - It is a statement of the financial position of the
business entity at a point in time. For each type of account--assets, liabilities,
or owner's equity--we can either increase or decrease the balance.
(At C&W it's our operating statement)
1-8a. What are the three sets of books that companies typically keep (1-17)?
TEST Right Ans - General Journal
All transactions recorded in chronological order as they occur
Cash Journal/Cash Receipts
· Cash journal is receipts for each business day
· Cash receipts includes all transactions of the business (more detailed)
General Ledger
Detailed transactions by ledger of account.
1-8b. What is a trial balance? (1-18) Right Ans - A component of the GL—
which is a list showing the title and balance of each account on the GL as of a
specific date. It can be used to check equality of debit and credit balances.
1-9. What are the generally accepted accounting principles (GAAP)? (1-19)
Right Ans - · Common set of accounting principles, standards, and procedures
· Codified by the Financial Accounting Standards Board (FASB) (not
international)
1-10. What are International Financial Reporting Standards (IFRS)? (1-19)
Right Ans - · Established and maintained by International Accounting
Standards Board.
· Used by many multinational companies in the US & Canada
1-11. What are internal reporting needs common to the real property
industry? (1-20) Right Ans - Numerous activities must be monitored and
reported to properly manage real property such as:
· Tenant collections
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LeCrae. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $23.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67096 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now