Since Most Real Estate Assets Are Depreciable, Using Accounting Income

question 32

Multiple Choice

Since most real estate assets are depreciable, using accounting income to measure a REIT's cash flow may actually understate the funds that are available to distribute to investors as dividends. Therefore, REITs utilize a measure that adds back depreciation and amortization expenses, more commonly referred to as:

• A) Net income
• B) Net asset value
• C) Funds from operations
• D) Effective gross income

---

Definitions:

Human Capital

Represents the economic value that an employee's skill set and knowledge brings to an organization.

High Demand

A situation where the need or desire for a product, service, or skill exceeds the supply or availability at the current price, often leading to increased prices or shortages.

Projection

An estimation or forecast of future outcomes based on current or past data.

HR Estimates

Approximations or forecasts concerning human resources needs, including staffing levels and budgeting for salaries or training.