A property manager bases the operating budget on:

• A. Projected net sales revenue for the period
• B. Total gross sales without deductions
• C. Historical depreciation expense
• D. Owner's equity in the property

Answer: (A)

Verified step by step guidance

1. Understand the concept of an operating budget: An operating budget is a financial plan that outlines expected revenues and expenses for a specific period, typically used to manage day-to-day operations.
2. Identify the key components of the operating budget: These include projected revenues, operating expenses, and other financial metrics relevant to the property manager's operations.
3. Analyze the options provided in the problem: Evaluate each option to determine which one is most relevant for creating an operating budget. For example, 'Projected net sales revenue for the period' is a forward-looking metric that aligns with budgeting principles.
4. Consider the purpose of the operating budget: The goal is to plan for future operations, which typically involves using projected figures rather than historical data or equity values.
5. Select the most appropriate basis for the operating budget: Based on the analysis, determine which option aligns with the principles of financial planning and budgeting for the property manager.