20 Financial Performance & NOI Practice Questions & Answers

Every Financial Performance & NOI practice question from the CAM Practice Test, with the correct answer and a short explanation.

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1. A community manager is walking an owner down the operating statement from gross potential rent to total rental revenue. Which item is NOT one of the four adjustments subtracted from gross potential rent?
- A.Vacancy loss on units sitting with no lease in place
- B.Concessions granted to new residents at move-in
- C.Other income earned from fees, laundry and parking✓ Answer
- D.Bad debt owed by residents who skipped owing rent
The four rental revenue adjustments are vacancy, concessions, bad debt and non-revenue units; each one is rent the property could have billed but will not collect, so each reduces gross potential rent down to total rental revenue. Other income is not an adjustment at all — it is added after total rental revenue to reach effective gross income, which is why it is the classic wrong answer here. Concessions, bad debt and vacancy loss are all genuine subtractions from the rent line.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — rental revenue adjustments in the cash flow statementReport a problem with this question
2. Which group of apartment homes is treated as non-revenue units when gross potential rent is adjusted?
- A.Units leased under older contracts priced below market
- B.Model units, the office unit and employee units✓ Answer
- C.Units held by residents who are behind on rent
- D.Units vacant and waiting to be turned for a new lease
Non-revenue units are homes the owner has deliberately taken out of the rentable pool — models, the leasing office, employee or discounted staff units and units converted to storage — so their rent is subtracted as its own adjustment rather than shown as vacancy. A delinquent resident produces bad debt, not a non-revenue unit; a home waiting to be turned is ordinary vacancy loss; and a home leased under an old below-market rent creates loss to lease, which is measured above gross potential rent.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — non-revenue unitsReport a problem with this question
3. A community has 240 apartment homes and an average market rent of $1,450 per home per month. Using only the figures given, what is the community's gross market rent for the month?
- A.$360,000
- B.$316,750
- C.$333,500
- D.$348,000✓ Answer
Gross market rent is total units multiplied by the average market rent — 240 × $1,450 = $348,000 — and it assumes every home is rented at market, including vacant units and units the owner has pulled out of service. The other figures come from the common errors of leaving vacant or non-revenue homes out of the unit count or rounding the rent up, all of which understate or overstate the 100% potential the statement is supposed to start from.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — gross market rentReport a problem with this question
4. That same 240-home community has gross market rent of $348,000 for the month. Of the homes, 210 are occupied at an average lease rent of $1,395 and 30 are vacant and offered at the $1,450 market rent. What is the loss to lease for the month?
- A.$11,550✓ Answer
- B.$43,500
- C.$16,500
- D.$23,100
Gross potential rent values occupied homes at their actual lease rent and vacant homes at market: (210 × $1,395) + (30 × $1,450) = $292,950 + $43,500 = $336,450, so loss to lease is $348,000 − $336,450 = $11,550. The $16,500 answer wrongly applies the $55 gap to all 240 homes instead of only the 210 leased below market, $43,500 is the market value of the vacant homes rather than a rent gap, and $23,100 doubles the correct figure.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — gross potential rent and loss to leaseReport a problem with this question
5. An operating statement shows gross potential rent of $412,000, vacancy loss of $28,000, concessions of $6,500, bad debt of $3,200, non-revenue units of $4,300 and other income of $19,600. What is effective gross income for the period?
- A.$350,400
- B.$370,000
- C.$389,600✓ Answer
- D.$431,600
Subtract the four rental revenue adjustments from gross potential rent to get total rental revenue — $412,000 − ($28,000 + $6,500 + $3,200 + $4,300) = $370,000 — then add other income of $19,600 for effective gross income of $389,600. The $370,000 choice stops at total rental revenue and forgets other income, $431,600 adds the adjustments back instead of subtracting them, and $350,400 subtracts other income as if it were a fifth adjustment.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — effective gross incomeReport a problem with this question
6. For the same month, effective gross income is $389,600, operating expenses are $214,300, debt service is $96,000, replacement reserves are $6,000 and a capital roof project cost $45,000. What is net operating income for the month?
- A.$130,300
- B.$28,300
- C.$79,300
- D.$175,300✓ Answer
Net operating income is effective gross income minus operating expenses only: $389,600 − $214,300 = $175,300. Debt service, capital expenditures and replacement reserves all sit below net operating income because they reflect how the owner financed and capitalized the asset rather than how the community operates, so $130,300 wrongly deducts the roof project, $79,300 wrongly deducts debt service and $28,300 deducts all three, which produces cash flow instead.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — net operating incomeReport a problem with this question
7. Using the same month — net operating income of $175,300, capital expenditure of $45,000, debt service of $96,000 and replacement reserves of $6,000 — what is the cash flow for the month?
- A.$124,300
- B.$28,300✓ Answer
- C.$79,300
- D.$34,300
Cash flow is net operating income less capital expenditure, debt service and replacement reserves: $175,300 − $45,000 − $96,000 − $6,000 = $28,300, the money actually available to the owner after every obligation the property carries. The $124,300 answer omits debt service, $79,300 omits the capital project and $34,300 omits the reserve funding, and each omission overstates what the owner can actually take from the month.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — cash flow statementReport a problem with this question
8. An owner asks why a $45,000 project that replaced every roof in the community did not reduce net operating income for the month. What is the BEST explanation?
- A.It is paid from replacement reserves, so no operating statement shows it
- B.It is a capital expenditure, subtracted below net operating income✓ Answer
- C.It is a repair expense, so it is spread evenly across the coming year
- D.It is an operating expense the owner pays outside the property books
Replacing all roofs is a large, non-recurring outlay that extends the useful life of the asset, so it is a capital expenditure and falls below the net operating income line, which is why operating results are unchanged. It is not a repair expense amortized through the operating budget, reserves are a funding source that still appears in the cash flow statement rather than a way to hide the cost, and the owner paying a bill personally would not remove a legitimate operating cost from the property's books.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — capital expenditures versus operating expensesReport a problem with this question
9. A community keeps its books on the accrual basis. A resident pays February rent on January 29 and the money is deposited that day. How is that payment treated on January's statements?
- A.As January rental revenue, since the cash was received then
- B.As a reduction of January's bad debt reserve balance
- C.As a liability for prepaid rent, not as January revenue✓ Answer
- D.As other income for January, since it is not yet earned rent
Accrual accounting recognizes revenue in the period it is earned, and February rent is earned in February, so in January the money is an obligation to deliver housing — prepaid rent, carried as a liability — and it becomes rental revenue on the February statement. Recording it as January revenue is the cash-basis answer, calling it other income misclassifies rent that will be earned, and nothing about a prepayment touches the bad debt reserve, which tracks amounts billed and judged uncollectible.
Source: Generally accepted accounting principles on revenue recognition, applied in the NAAEI Certified Apartment Manager materials on accounting methodsReport a problem with this question
10. June's operating statement shows a $9,000 plumbing repair that was completed in June, even though the invoice will not be paid until July. Which accounting method does this reflect?
- A.Accrual basis, which records the expense when the work is done✓ Answer
- B.Cash basis, which records the expense when the check is written
- C.Modified cash basis, which records the expense when it is paid
- D.Cash basis, which records the expense when the invoice arrives
Accrual accounting records an expense in the period it is incurred — the month the work was performed — regardless of when cash leaves the account, which is what matches June's expense to June's revenue and makes the month's result meaningful. Both cash-basis options would push the $9,000 into July when the check is written or the invoice is processed, and modified cash basis likewise keys the expense to payment, so none of them would put the repair on June's statement.
Source: Generally accepted accounting principles on expense recognition, applied in the NAAEI Certified Apartment Manager materials on accounting methodsReport a problem with this question
11. A regional supervisor asks the community manager which budget line she has the LEAST ability to control from the site. Which line is it?
- A.Make-ready painting and carpet cleaning for turns
- B.Advertising and marketing to attract prospects
- C.Services contracted for landscaping and grounds care
- D.Real estate taxes assessed on the property✓ Answer
Real estate taxes are a fixed expense set by the taxing authority's assessment and rate, so no decision made at the site changes the amount in the budget period; the manager's role is to forecast it and, at most, support an appeal through ownership. Landscaping contracts, make-ready specifications and advertising spend are all controllable variable expenses the manager negotiates, schedules or reallocates, which is exactly why a variance on those lines is held against the site while a tax variance is not.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — fixed versus variable (controllable) operating expensesReport a problem with this question
12. To finish the month inside the expense budget, a manager postpones scheduled exterior painting that the buildings clearly need. What is the MOST likely result of that decision?
- A.Net operating income falls this month, because the unpainted buildings are written down on the operating statement
- B.Operating expense falls and net operating income rises this month, and the savings carry forward as a permanent gain for the owner
- C.Operating expense is unchanged this month, because postponed work is still accrued in the month it was scheduled
- D.Operating expense falls and net operating income rises this month, while the deferred work builds and erodes the asset's condition and value✓ Answer
Skipping the work removes an operating expense from the period, so this month's net operating income looks better, but the need does not go away: deferred maintenance accumulates, costs more when it is finally done, and a visibly tired property loses rent and appeal, so the owner's asset value falls even as the monthly report improves. The savings are not permanent because the work must still be paid for, accrual accounting records an expense when work is performed rather than when it was scheduled, and an operating statement does not write down buildings for appearance.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — maximizing net operating income and the effect of deferred maintenance on valueReport a problem with this question
13. December collections landed far below the business plan, and the owner has been told all quarter to expect a strong finish. What should the community manager do FIRST?
- A.Hold the write-off of known skips until the next quarter so December collections look closer to the plan
- B.Report the actual December numbers on time, with the causes of the shortfall and a specific plan to recover it✓ Answer
- C.Apply prepaid January rent into December so the quarter closes near what the owner was told to expect
- D.Reclassify part of the shortfall into other income so the rent revenue line still tracks the business plan
Reporting performance honestly and on time is a professional obligation and the only version of the number the owner can actually act on, so the manager delivers the real result together with the causes and a corrective plan rather than managing the owner's mood. Pulling January prepayments into December, delaying known write-offs and parking rent shortfalls in other income are all misstatements: each moves revenue or losses into the wrong period or the wrong line, and the gap simply reappears next month with the manager's credibility gone.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — reporting property performance honestly and accurately to prevailing ethical standardsReport a problem with this question
14. A resident lived in the apartment for the full month and was billed the full rent, then moved out overnight owing that rent, and the balance is judged uncollectible. Which rental revenue adjustment records it?
- A.Vacancy loss, because the apartment produced no rent that month
- B.Concession, because the resident did not pay full rent for the month
- C.Bad debt, because the billed rent will not be collected✓ Answer
- D.Non-revenue unit, because the unit produced no rent
Bad debt is billed rent the property has given up collecting, which is exactly this case: the home was occupied and leased, the rent was charged, and the receivable is now written off. Vacancy loss applies only to homes with no lease in place, a concession is a discount the community agreed to in advance, and a non-revenue unit is one the owner deliberately removed from the rentable inventory — none of which describes a resident who occupied the home and skipped.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — bad debt, vacancy, concessions and non-revenue unitsReport a problem with this question
15. A community offers one month free on a twelve-month lease at the $1,500 market rent. How should the operating statement handle that giveaway?
- A.Show the full $1,500 in gross potential rent and subtract the free month on the concession line, keeping the discount visible✓ Answer
- B.Leave gross potential rent alone and net the free month against other income in the month it is given
- C.Leave gross potential rent alone and record the free month as bad debt when the rent is not collected
- D.Lower the lease rent on the rent roll to $1,375 so that gross potential rent already reflects the discount given
Concessions are reported as their own subtraction precisely so the owner can see how much rent is being given away to fill units; burying the discount in a lower stated rent hides the cost of the leasing strategy and makes future pricing decisions blind. Rewriting the rent roll down to $1,375 destroys that visibility, calling the free month bad debt misstates a discount the community chose to grant as an uncollectible receivable, and netting it against other income mixes a rent reduction into a line that has nothing to do with rent.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — concessions as a rental revenue adjustmentReport a problem with this question
16. An owner wants a higher net operating income from the community this year. Which action would actually raise net operating income?
- A.Pay down loan principal with reserve cash so the interest portion of the payment shrinks
- B.Launch a billable valet trash service that adds more other income than the service costs to run✓ Answer
- C.Refinance the mortgage at a lower interest rate to cut the monthly debt service payment
- D.Postpone funding the replacement reserve until the last quarter of the fiscal year
Net operating income is effective gross income minus operating expenses, so it moves only when revenue or operating expense moves; a fee service that collects more than it costs to deliver raises other income net of its expense and lifts net operating income. Refinancing and paying down principal both change debt service, and reserve funding is a below-the-line item, so all three change the owner's cash flow while leaving net operating income — and therefore the property's income-based value — exactly where it was.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — maximizing net operating income by increasing revenue and reducing expenseReport a problem with this question
17. The approved business plan holds renewal increases modest in order to protect occupancy. Market rents then jump, and the leasing manager wants to push renewals far above plan. What should the community manager do FIRST?
- A.Hold the plan unchanged and revisit pricing in next year's budget cycle
- B.Reprice renewals immediately, since the market clearly supports the increase
- C.Raise renewals now and disclose the change in the monthly report
- D.Take the market data to the owner and get the plan amended before repricing✓ Answer
The business plan is the owner's stated investment strategy, and the manager operates the property to that strategy, so a change of this size belongs to the owner and is made by amending the plan with the market data that justifies it. Repricing first and reporting later reverses the authority, acting immediately on market strength ignores the occupancy goal the plan was built around, and waiting a full budget cycle surrenders real revenue the owner might well want to capture.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — managing the property according to the business plan and the owner's investment goalsReport a problem with this question
18. Turnover at a community has climbed sharply this year. Which description BEST shows how that operating result flows into the financial result?
- A.Operating expense rises while effective gross income holds, because departing residents forfeit deposits that offset the lost rent
- B.Net operating income is unaffected, because higher turnover only moves rent revenue from one apartment home to another
- C.Vacancy loss and make-ready expense rise, so effective gross income falls while operating expense grows✓ Answer
- D.Vacancy loss rises but operating expense is unaffected, because make-ready work is charged to the capital budget instead
Turnover is an operating statistic with two financial consequences at once: every vacated home stops producing rent until it is leased again, which raises vacancy loss and lowers effective gross income, and every turn consumes paint, flooring, cleaning and labor, which raises operating expense — so net operating income is squeezed from both directions. Routine make-ready work is an operating expense, not a capital item, retained deposits rarely come close to covering lost rent and turn costs, and rent revenue is not simply transferred between homes because vacant days are gone for good.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — analyzing financial operations and the interdependence of operating and financial resultsReport a problem with this question
19. A manager wants to verify that the rent revenue on the monthly statement matches what residents are actually contracted to pay, apartment home by apartment home. Which record should she pull?
- A.The rent roll, with the lease rent and term of each unit✓ Answer
- B.The balance sheet, with the assets and liabilities held
- C.The chart of accounts, with every account currently in use
- D.The aged receivable report, with each balance listed by age
The rent roll is the unit-by-unit listing of who occupies each home, the contracted rent and the lease dates, so it is the record that ties the summary rent line on the operating statement back to actual signed leases. The aged receivable report shows who owes what and for how long rather than what is contracted, the balance sheet reports financial position at a point in time and carries no unit detail, and the chart of accounts is only the list of account categories the company uses.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — rent roll and property financial recordsReport a problem with this question
20. A management company requires every invoice to be coded to a specific account number before it is paid. What is the PRIMARY reason for that requirement?
- A.Like costs land on the same statement line every month, so results can be compared across periods and across properties✓ Answer
- B.Coding an invoice to an account number is what shifts the cost from the operating budget to the capital budget
- C.The account number tells the vendor which property to bill for the next service performed at the community
- D.Invoices coded to an account number are paid faster by the accounting department than invoices coded by hand
The chart of accounts exists to put the same kind of cost in the same place every time, and that consistency is what makes a monthly statement comparable to prior periods, to the plan and to other communities in the portfolio; without it a spike in a line means nothing. Coding does not speed up payment, it does not by itself convert an operating cost into a capital one — the nature of the expenditure does — and it is an internal classification that the vendor never uses.
Source: NAAEI Certified Apartment Manager Exam Blueprint, Managing and Analyzing Financial Performance — chart of accounts and general ledger codingReport a problem with this question

Practice questions based on the NAAEI CAM V2 Exam Blueprint and standard apartment-management practice. CAM and NAAEI are marks of the National Apartment Association; this site is not affiliated with or endorsed by NAA or NAAEI. The credential itself requires CAM coursework plus 12 months of onsite property management experience, which may be earned while you take the course. Fair housing questions here cover the federal protected classes; landlord-tenant rules, and the protected classes added on top of the federal set, are state and local law and are not covered — check the law where your community sits. Confirm current requirements with NAAEI before testing. About the CAM credential →

1. A community manager is walking an owner down the operating statement from gross potential rent to total rental revenue. Which item is NOT one of the four adjustments subtracted from gross potential rent?

2. Which group of apartment homes is treated as non-revenue units when gross potential rent is adjusted?

3. A community has 240 apartment homes and an average market rent of $1,450 per home per month. Using only the figures given, what is the community's gross market rent for the month?

4. That same 240-home community has gross market rent of $348,000 for the month. Of the homes, 210 are occupied at an average lease rent of $1,395 and 30 are vacant and offered at the $1,450 market rent. What is the loss to lease for the month?

5. An operating statement shows gross potential rent of $412,000, vacancy loss of $28,000, concessions of $6,500, bad debt of $3,200, non-revenue units of $4,300 and other income of $19,600. What is effective gross income for the period?

6. For the same month, effective gross income is $389,600, operating expenses are $214,300, debt service is $96,000, replacement reserves are $6,000 and a capital roof project cost $45,000. What is net operating income for the month?

7. Using the same month — net operating income of $175,300, capital expenditure of $45,000, debt service of $96,000 and replacement reserves of $6,000 — what is the cash flow for the month?

8. An owner asks why a $45,000 project that replaced every roof in the community did not reduce net operating income for the month. What is the BEST explanation?

9. A community keeps its books on the accrual basis. A resident pays February rent on January 29 and the money is deposited that day. How is that payment treated on January's statements?

10. June's operating statement shows a $9,000 plumbing repair that was completed in June, even though the invoice will not be paid until July. Which accounting method does this reflect?

11. A regional supervisor asks the community manager which budget line she has the LEAST ability to control from the site. Which line is it?

12. To finish the month inside the expense budget, a manager postpones scheduled exterior painting that the buildings clearly need. What is the MOST likely result of that decision?

13. December collections landed far below the business plan, and the owner has been told all quarter to expect a strong finish. What should the community manager do FIRST?

14. A resident lived in the apartment for the full month and was billed the full rent, then moved out overnight owing that rent, and the balance is judged uncollectible. Which rental revenue adjustment records it?

15. A community offers one month free on a twelve-month lease at the $1,500 market rent. How should the operating statement handle that giveaway?

16. An owner wants a higher net operating income from the community this year. Which action would actually raise net operating income?

17. The approved business plan holds renewal increases modest in order to protect occupancy. Market rents then jump, and the leasing manager wants to push renewals far above plan. What should the community manager do FIRST?

18. Turnover at a community has climbed sharply this year. Which description BEST shows how that operating result flows into the financial result?

19. A manager wants to verify that the rent revenue on the monthly statement matches what residents are actually contracted to pay, apartment home by apartment home. Which record should she pull?

20. A management company requires every invoice to be coded to a specific account number before it is paid. What is the PRIMARY reason for that requirement?