Financial Operations & Budgeting Flashcards
7 cards from real CCS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Operations & Budgeting flashcards as text
What is the primary purpose of a condominium association's reserve fund?
Answer: To fund future major repairs and replacements of common elements
Reserve funds are specifically designated to cover future major repairs and replacements of common elements such as roofs, elevators, and pavement.
A condominium association collects $500,000 in annual assessments but spends $480,000 on operating expenses. The $20,000 surplus should be:
Answer: Transferred to the reserve fund
Best practice and many state statutes require surplus operating funds to be transferred to the reserve fund to build capital reserves.
Which financial statement shows a condominium association's assets, liabilities, and equity at a specific point in time?
Answer: Balance sheet
The balance sheet (also called statement of financial position) presents assets, liabilities, and equity as of a specific date.
A 'percent funded' reserve study result of 30% indicates that the association:
Answer: Has only 30% of the ideal reserve balance on hand
Percent funded measures the ratio of actual reserve balance to the fully funded target; 30% means the association is significantly underfunded.
When an association borrows money to fund a major capital project, the loan repayment should be tracked in the:
Answer: Both operating and reserve budgets appropriately
Loan principal repayments typically appear in the reserve fund while interest expense may be reflected in the operating budget, depending on the association's accounting policy.
Which method of accounting recognizes revenue when assessments are due, regardless of when cash is received?
Answer: Accrual basis accounting
Accrual basis accounting records revenues and expenses when they are earned or incurred, not when cash changes hands.
A special assessment is most appropriately levied when:
Answer: Reserve funds are insufficient to cover an unexpected major repair
Special assessments are typically used when reserves are inadequate to cover a necessary major repair or capital project that cannot wait.