CMCA CMCA - Certified Manager of Community Associations Budgeting and Reserve Studies Questions and Answers 3

Question 1

A reserve study conducted by an outside professional that includes a site visit and component analysis is classified as a:

Accepted Answer

Level I Full update with site visit

Answer

Level II Update with no site visit

Answer

Level III Update with no site visit or analysis

Answer

Level IV Self-administered study

Question 2

Which financial statement best shows an association's reserve fund balance at a specific point in time?

Accepted Answer

Balance sheet or statement of financial position

Answer

Income statement

Answer

Cash flow statement

Answer

Statement of changes in equity

Question 3

A manager notices that the reserve study lists a component's remaining useful life as zero but the component has not been replaced. The best immediate action is to:

Accepted Answer

Notify the board so it can inspect the component and decide whether to replace or extend its life

Answer

Delete the component from the reserve study

Answer

Increase the monthly assessments by 50% immediately

Answer

Automatically place the component replacement cost in next month's budget

Question 4

In an association budget, contingency funds are best described as:

Accepted Answer

A line item covering unexpected operating expenses within the fiscal year

Answer

Funds illegally diverted from the reserve account

Answer

The total reserve fund balance

Answer

Money earmarked for a specific capital project

Question 5

When reviewing a proposed annual budget, the board should compare it against:

Accepted Answer

The previous year's actual expenses and current year-to-date actuals

Answer

The reserve study only

Answer

The budgets of neighboring associations

Answer

The national average for HOA assessments

Question 6

An association that borrows money to fund a capital replacement project instead of using reserves is said to be using:

Accepted Answer

Deficit financing

Answer

Reserve borrowing

Answer

Assessment waiver

Answer

Capital lending