Florida Real Estate Practice Exam

Potential gross income minus vacancy and collection losses is

1. Effective gross income

2. Net income

3. Total income

4. Potential income

The correct answer is: Effective gross income

Potential gross income minus vacancy and collection losses is known as effective gross income because it takes into account the potential income that could be earned and subtracts losses due to vacancies and uncollected rent. This reflects the actual income that the property is generating, making option A the most appropriate choice. Options B, C, and D are incorrect because they do not accurately describe the calculation of potential gross income minus vacancy and collection losses. Net income refers to the remaining income after all expenses have been paid, total income is the sum of all income sources, and potential income does not take into account potential losses.