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Intermediate1.5 hours16 terms

Accrued Income: Key Terms for RE Investors

Explore a curated collection of key terms that might be helpful when navigating accrued income concepts in real estate investment. This reference focuses on commonly referenced accounting principles and income recognition terminology you may encounter, supporting your learning journey without claiming comprehensive coverage.

Term Collection

1

Bad Debt Expense

Bad debt expense is the portion of accounts receivable, such as unpaid rent, that a real estate investor determines is uncollectible. It represents an estimated loss from revenues that will not be recovered, directly impacting a property's profitability.

Intermediate2-3 min
2

Rent Roll

A rent roll is a comprehensive document detailing a property's rental income, occupancy, and lease terms for each unit, essential for financial analysis and property management.

Intermediate15-18 min
3

Accrued Revenue

Accrued revenue represents income that a real estate entity has earned through services or assets provided but has not yet received in cash or formally billed to the client. It is recognized as an asset on the balance sheet.

Intermediate5 min
4

Accrual Basis Accounting

Accrual basis accounting records revenues when they are earned and expenses when they are incurred, regardless of when cash actually changes hands. This method provides a more accurate picture of a business's financial performance over time.

Beginner5 min
5

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min
6

Effective Gross Income

Effective Gross Income (EGI) is a realistic measure of a property's total potential revenue, calculated by subtracting estimated vacancy and credit losses from its Potential Gross Income (PGI). It provides a more accurate picture of a property's income-generating capability for financial analysis.

Intermediate12-13 min
7

Capitalization Rate

The Capitalization Rate (Cap Rate) is a real estate valuation metric used to estimate the potential rate of return on an investment property, calculated by dividing its Net Operating Income (NOI) by its current market value.

Intermediate14-15 min
8

Tenant Ledger

A tenant ledger is a comprehensive financial record detailing all monetary transactions between a landlord and a specific tenant, tracking charges and payments chronologically.

Intermediate2-3 min
9

Accounts Receivable

Accounts Receivable (AR) represents money owed to a real estate investor by tenants or other parties for services rendered or goods provided, such as rent, late fees, or repair charges.

Beginner3 min
10

Vacancy Rate

The vacancy rate is the percentage of all available rental units in a property or market that are currently unoccupied or not generating income, serving as a key indicator of a property's financial health and market demand.

Beginner13-14 min
11

Lease Agreement

A legally binding contract between a landlord and a tenant that outlines the terms and conditions of renting a property, including rent, duration, and responsibilities.

Beginner18-20 min
12

Revenue Recognition

Revenue recognition is an accounting principle that dictates when and how revenue should be recorded in financial statements, ensuring it is recognized when earned, not necessarily when cash is received.

Intermediate5 min
13

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's or individual's financial health at a specific point in time, detailing assets, liabilities, and owner's equity.

Intermediate4-5 min
14

Gross Potential Income

Gross Potential Income (GPI) is the maximum possible revenue a rental property could generate if all units were fully occupied at market rent, including all other income sources, before accounting for expenses.

Beginner13-14 min
15

Profit and Loss Statement

A financial report summarizing a property's revenues, costs, and expenses over a specific period, typically a quarter or a year, to determine its net profit or loss.

Intermediate5 min
16

Statement of Cash Flows

The Statement of Cash Flows (SCF) is a financial report detailing the cash generated and used by a business or investment property over a period, categorized into operating, investing, and financing activities. It provides crucial insights into liquidity and solvency for real estate investors.

Intermediate6 min

Common Questions