Accounting Method


A property manager may suggest physical changes to a client’s property in order to correct or address different forms of depreciation. Which of the following is true?

a.Correcting curable external obsolescence is called remodeling

b.Correcting curable physical deterioration is called remodeling

c.Correcting curable functional obsolescence is called rehabilitation

d.Correcting deferred maintenance is called rehabilitation


A property manager needs a bad debt and vacancy factor for a residential property’s annual operating budget. She is most likely to:

a.check the MSA website to see projected average vacancy rates for her area

b.evaluate the property’s actual rent collection record in previous years

c.base it on changes in the Consumer Price Index

d.use the figure agreed to in the management agreement 1


A property manager rejected a rental application for a retail space because of the applicant’s race. Was this legal or illegal?

a.Legal, because this is commercial property and the Fair Housing Act applies only to residential property

b.Legal, because antidiscrimination laws apply to real estate sales transactions, not lease transactions

c.Illegal, because any discrimination by a property manager is a violation of the manager’s fiduciary duties

d.Illegal, because the Civil Rights Act of 1866 prohibits discrimination based on race or color in all real estate transactions


A property manager records rents collected from tenants when they are actually paid (not merely owed), but he records certain operating expenses as they accrue (as opposed to when they’re paid). This manager is using the:

a.payment point accounting method

b.certified accounting method

c.modified cash-basis accounting method

d.triple-entry accounting method

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