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

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