BOMI- Budgeting and Accounting
UPDATED Exam Questions and
CORRECT Answers
Which key components make up the bookkeeping process? (2) - CORRECT ANSWER-
recording and classifying transactions is known as bookkeeping.
Describe the roles filled by a accountant (3) - CORRECT ANSWER- Accounting is a system
of summarizing, interpreting, and communicating financial data.
What are the primary functions associated with accounting ? (4) - CORRECT ANSWER-
Accounting is the next step in the process. Accounting is the system of summarizing,
interpreting, and communicating financial data.
Specify functions incorporated in the budgeting process. (4) - CORRECT ANSWER-
Budgeting is the ongoing process of coordinating resources and expenditures. Through this
process, a plan is created with research and data as the foundation.
The budget reflects the priorities of the business and the resources needed to accomplish
them. - CORRECT ANSWER-
Describe the accounting cycle types most common to commercial real estate management
business (5) - CORRECT ANSWER- revenue cycle and the expenditure cycle
What are the three summary account types ? (9) - CORRECT ANSWER- assets, liabilities,
and owner's equity—with each other as they increase and decrease with debits and credits.
On the balance sheet, assets, liabilities, and owner's equity show the current status of the
finances of the business or the building. - CORRECT ANSWER-
How are debits and credits applied to fundamental accounting equation ? (11-12) -
CORRECT ANSWER- liabilities and owner's equity normally have a credit balance
,a credit entry will increase the liability or owner's equity and a debit entry will decrease the
liability or owner's equity
assets -normally have a debit balance, a debit entry will increase the value of an asset, a credit
entry will decrease the value of an asset - CORRECT ANSWER-
explain the relationship between the balance sheets and summary accounts (15) - CORRECT
ANSWER- The balance sheet is literally a statement of the balances, or amounts, within all
of the assets, liabilities, and owner's equity summary accounts of the business.
what are the generally accepted accounting principles ? (GAAP) (19) - CORRECT
ANSWER- Generally accepted accounting principles (GAAP) are a common set of
accounting principles, standards, and procedures that companies use to record accounting
data and compile their financial statements.
GAAP is a combination of authoritative standards (set by policy boards), as well as
commonly accepted ways of recording and reporting accounting information. - CORRECT
ANSWER- These standards are codified by the Financial Accounting Standards Board
(FASB).
What are international accounting standards ?(19) - CORRECT ANSWER- Standards
established and maintained by the International Accounting Standards Board, that are used by
multi national companies
What are internal reporting needs common to the real property industry?(20) - CORRECT
ANSWER- property industry internal reporting includes , tenant collections, vendor
payments, and monthly operating results.
Describe standard financial statements that businesses use? (20) - CORRECT ANSWER-
These financial statements consist of an income statements, a balance sheet, and a statement
of cash flows.The income statement shows revenues earned and expenses incurred in earning
those revenues, resulting in net income or net loss for the period.
What are common accounting methods used for recording financial transactions ? (21) -
CORRECT ANSWER- Accounting and financial reports can be prepared on a cash, accrual,
or modified accrual (also known as hybrid) accounting basis.
,When the cash method is used, income and expenses are recorded only when they are
received or paid out. This form of accounting is the most basic and has a cote focus on the
actual timing of both cash received and cash dispersed. - CORRECT ANSWER-
Explain accounting control strategies as they are used in real estate. (22) - CORRECT
ANSWER- control strategies place to detect fraud or theft but are primarily put in place to
avoid human error. strategies to avoid missed cash collection, or conversely excessive
outflows that deplete an owners cash. These include, collections, costs controls
Scenario - Chapter 1. Harold, an experienced finances manager for Beach Properties, hired
Janet and is reviewing the various aspects of budgeting and accounting that she will need to
understand and perform. - CORRECT ANSWER- Although she majored in finance at the
local college, she lacks real world experience. As Harold works with her over the next few
weeks, he will seek to gauge her level of understanding of budgeting and accounting
fundamentals.
He will also have her perform some basic tasks. To the degree that she succeeds, she will
move on to more important and complicated projects. To the degree that she fails, Harold will
provide additional training and support. - CORRECT ANSWER-
"Janet, your main job function for the next few months will be to record and classify
transactions" says Harold. "In other words, you will be performing the process of..Blank..
a. accounting b. bookkeeping
c. budgeting d. financing - CORRECT ANSWER- b. bookkeeping
To the degree you are able to assume the role of accountant, Harold informs Janet, you'll
engage in many more functions. However you will not be responsible for ....Blank ...
Financial data - CORRECT ANSWER- B. memorizing
If Janet performs an accounting function, she will.. blank...financial data.
a. classify
b. identify
c. interpret
d. record - CORRECT ANSWER- c. interpret
, remember Janet, that when we create our budget, we make a plan for the financing
expenditures in the ...Blank..., says Harold - CORRECT ANSWER- d. next year
At lunch, Janet tells a friend that some of the job functions she will be performing include
acquiring property, paying for it, and reporting on what is acquired and paid for. "Oh," her
friend correctly notes, "then you'll be involved in the....BLANK..cycle of accounting."
a. asset
b. control
c. revenue
d. expenditure - CORRECT ANSWER- d. expenditure
When Janet "balances the books" (or the summary accounts), she will basically be dealing
with:
a. assets, liabilities, and owner's equity.
b. tax planning, revenues, and liabilities.
c. liabilities, budgets, and owner's equity.
d. owner's equity, capital, and tax planning. - CORRECT ANSWER- a. assets, liabilities, and
owner's equity
Janet," asks Harold, "if the company takes out a loan to make capital purchases, how would
you record this?" To be correct, Janet should record the money received as a________in
Assets and as a__ in Liabilities.
a. debit; debit
b. debit; credit
c. credit; debit
d. credit; credit - CORRECT ANSWER- b. debit; credit
Day after day, Janet records debits and credits for each entry to the balance sheet. This pro-
cess is referred to as accounting.
a. single-pass
b. double-pass
c. single-entry
d. double-entry - CORRECT ANSWER- d. double-entry
