Question

1. In most states, which of the following does not have to be placed in a trust account?

a. Rents

b. Miscellaneous income from parking and laundry

c. Manager's fee when paid

2. Is monthly debt service an operating expense?

a. No, it's a variable expense

b. No, although some owners have the property manager pay the debt service out of rental income  

c. Yes, it's always considered an operating expense

3. Mariah calculates the property's potential rental income figure for the coming year. She then subtracts a vacancy and collection loss factor in order to determine the:

a. gross income ratio

b. operating expenses

c. effective gross income

4. The IRS classifies rental income from investment property as:

a. ordinary income

b. capital gains

c. passive income

5. The cash-basis method of accounting involves:

a. recording expenses when paid

b. recording expenses when incurred

c. recording income when due

Answer 1

1) b. Miscellaneous income from parking and laundry.

2) c. Yes, it's always considered an operating expense.

3) c.effective gross income.

4) c.passive income.

5) a.recording expenses when paid