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Humber College Exam 4: Invigilated Theory Sample Questions:

1. The operating costs of a commercial building are usually higher than those of buildings that do not have any common areas. Common area maintenance (CAM) is referred to as the landlord's operating costs attributable to factors that affect the common areas. Which of the following is NOT one of those factors?

A) Repairs
B) Supervision
C) Depreciation
D) Operations

2. A salesperson has several obligations to the buyer when assisting them in the purchase of a commercial condominium unit for their own use. Which of the following is one of those obligations?

A) Ensure the buyer had the opportunity to fully inspect the financial statements of both the condominium and the seller's business
B) Confirm the buyer's intended use adheres to all municipal zoning requirements
C) Review all documentation and advise the buyer regarding the financial status of the condominium corporation, including the reserve fund
D) Advise the buyer to commission a Phase 3 Environmental Site Assessment in addition to their inspection

3. Audited and unaudited statements provide the financial status of a business to potential buyers. What is the main difference between audited and unaudited financial statements?

A) Audited financial statements provide an accurate picture of the financial status of a business; unaudited financial statements may only contain partially reviewed information.
B) Unaudited financial statements are prepared by Chartered Professional Accountants; audited financial statements are prepared by senior Chartered Professional Accountants.
C) Audited financial statements comply with Generally Accepted Accounting Principles (GAAP); unaudited financial statements do not comply with GAAP.
D) Unaudited financial statements are prepared by accounting students; audited financial statements are completed by accountants who have received their professional designation.

4. A land developer is interested in purchasing a piece of vacant land. Which of the following statements about evaluating the highest and best use of the real property is correct?

A) A designated appraiser will use all factual sales data to determine the value of the current highest and best use of the property.
B) The estimate of value is related to how a typical buyer, with a reasonable knowledge of the market and property, wants to use the property.
C) A property's highest and best use is the use that, at the time the building was built, was most likely to produce the greatest net return.
D) The land developer can identify the use of the property that is anticipated to produce the highest overall return so the appraiser can complete the appraisal.

5. A salesperson is assisting the buyer of a retail condominium with the due diligence process. What is a leading practice they should recommend to the buyer?

A) Ensure there is parking and repair space available for commercial trucks.
B) Obtain the existing status certificate from the brokerage to verify all restrictions, including shared premises with other businesses in the commercial condominium.
C) Verify if there are any non-competition provisions that need to be satisfied as set out in thecondominium rules or bylaws.
D) Confirm that the contract of the condominium property management company has been renewed for at least 10 years.

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