CCM CCM Financial Management & Budgeting

Question 1

A community manager is preparing an annual operating budget for a homeowners association. Which document should they primarily reference to ensure accuracy?

Accepted Answer

Prior year's audited financial statements

Answer

The marketing plan

Answer

Member satisfaction surveys

Answer

State incorporation documents

Question 2

Which financial reserve is specifically set aside to fund future major repair and replacement of common area components?

Accepted Answer

Capital reserve fund

Answer

Operating reserve

Answer

Emergency contingency fund

Answer

Petty cash account

Question 3

When a community association's actual expenses exceed budgeted amounts mid-year, what is the BEST first step for the community manager?

Accepted Answer

Prepare a variance analysis and present options to the board

Answer

Immediately increase monthly assessments

Answer

Defer all vendor payments until next fiscal year

Answer

Transfer funds from the reserve account without board approval

Question 4

What is the primary purpose of a reserve study for a community association?

Accepted Answer

To project the useful life and replacement cost of major components

Answer

To assess member satisfaction with amenities

Answer

To evaluate vendor contract performance

Answer

To determine marketing spend allocation

Question 5

Under standard community association financial practices, who has the authority to approve unbudgeted expenditures that exceed a defined threshold?

Accepted Answer

The board of directors

Answer

The property management company acting alone

Answer

Any individual unit owner

Answer

The community manager acting alone

Question 6

Which accounting method records revenue when earned and expenses when incurred, regardless of when cash changes hands?

Accepted Answer

Accrual basis accounting

Answer

Cash basis accounting

Answer

Modified cash basis accounting

Answer

Single-entry bookkeeping