IREM Certified Property Manager (CPM) Practice Test 2025 – All-in-One Guide to Exam Success!

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What is a significant feature of a chart of accounts?

It tracks employee performance

It includes only revenue accounts

It organizes accounts by purpose and function

A significant feature of a chart of accounts is that it organizes accounts by purpose and function. This organization allows for a systematic way to categorize financial transactions and results. Each account is designed to reflect a specific aspect of the financial condition and operational activity of the property being managed. By grouping accounts into specific categories—such as assets, liabilities, equity, revenues, and expenses—it helps property managers and accountants easily track and understand where funds are coming from and where they are being allocated.

This organization is crucial for accurate financial reporting and analysis, which ultimately supports better decision-making and financial management. It enables stakeholders to evaluate performance clearly and enables efficient tracking over time, laying a solid foundation for budget preparation and financial planning.

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It displays risks associated with operations

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