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Updated over 7 years ago on . Most recent reply presented by

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Llewelyn A.
  • Investor / Broker
  • Brooklyn, NY
1,744
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665
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Broker's Course - Is the Answer to this Exam Question correct?!

Llewelyn A.
  • Investor / Broker
  • Brooklyn, NY
Posted

I am taking the New York Broker's 45 Hour Course online. Some of the questions doesn't seem right to me.

I took a snapshot of the question I had a problem with:

Is it right to say that in the Total Expenses, Mortgage Principal and Depreciation should be used?

Is it right to say that "The owner shows a negative cash flow (loss) of $1,000 for tax purposes" when you are counting the Mortgage Principal as an expense?!

Here is the next questions and answer:

The answer to "When the total of operating expenses, interest and depreciation exceeds rental income, the result is" NEGATIVE CASH FLOW!?

Cash Flow does NOT include Depreciation, doesn't it?

Cash flow should equal Gross Income minus Operating Expenses minus Debt Service. BUT NOT DEPRECIATION. Depreciation is a Tax Accounting implementation, not a real expense!

What do you think? Should I ask for these questions to be corrected or are the answers correct?

Thanks!

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