Certified Pennsylvania Evaluator Practice Exam

What is a common expense that can be categorized under management expenses?

1. Property taxes

2. Minimum wage worker salaries

3. Repairs for property damage

4. Insurance for the property

The correct answer is: Insurance for the property

Management expenses typically include costs associated with overseeing and maintaining properties, which can encompass a variety of operational costs necessary for smooth management. Insurance for the property is essential because it protects against potential risks and liabilities that could arise from property management. This expense is crucial for safeguarding the asset value and ensuring compliance with legal and financial obligations. In contrast, property taxes are usually categorized as a financial obligation to the government rather than a management expense. Minimum wage worker salaries, although they can relate to operational functioning, are often classified under labor costs rather than management expenses specifically. Repairs for property damage fall under maintenance or operational repairs, which are separate from management-related costs. Each option reflects important aspects of property management, but insurance uniquely fits the definition of a management expense as part of the overall risk management strategy.