Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Which of the following is one of the components of the general operating budget?

1. Net profits

2. Gross income

3. Revenue streams

4. Tax deductions

The correct answer is: Gross income

The correct choice is the component known as gross income. In the context of a general operating budget, gross income represents the total income generated by a property or business before any expenses are deducted. It serves as the starting point for budget planning, as it helps in assessing the overall financial health and performance of the operation. Gross income is crucial because it informs financial decisions and expenditure planning. By understanding the expected income, property managers and business operators can allocate budgets for maintenance, management, and other operational costs appropriately. This makes it a fundamental aspect of the overall operating budget. While net profits, revenue streams, and tax deductions are all related to financial performance, they do not represent the initial income figure used to create an operating budget. Net profits are calculated after all expenses have been deducted, revenue streams can refer to different sources of income but do not encapsulate the total income before expenses, and tax deductions relate to taxable income rather than budget forecasting.